You doubtless know only too well that the information that is contained in your personal credit report is used by the credit card and loan companies when deciding whether or not to extend you credit, but are you aware of what is actually in your credit report? Did you know for instance that the information contained in your personal credit report could determine whether or not you are able to buy that new home or are going to have to stay in your present ‘shoebox’?
In many cases people believe that if a credit card company or other lender looks at your credit report they are just looking at your credit score and, while this is without doubt one thing that they do look at, they are also looking at a great deal more. Most especially, they are looking at how much debt you have compared to your income and even relatively small accounts, such as those with a mail order catalogue company, will be treated as a deduction from your income when it comes to considering a request for a loan.
If a lender concludes that you have got less money coming in than you have going out then your application will certainly be reject. Actually, by law a certain percentage of your income must be available to meet the payments on a loan before the lender can approve it, regardless of the reason for the loan.
Lenders will also be looking back at your credit history for the past seven years to see how you have managed loans in existence during that period. Specifically, they are looking at whether you have made your payments on time and will take note of any payments which were more than thirty days late. It might not have appeared particularly important to you when you ran into a few problems and were late with your payments for a few months on one of your accounts, however a lender will certainly consider this when assessing the risk of lending to you now.
A lender is also going to see if any of your accounts have run into debt during the past seven years and if these debts have now been paid off. If you have payments outstanding on a current loan agreement credit card companies and other lenders will be very wary when it comes to extending you further credit before these are paid off.
Finally, your personal credit report will also show if you have filed for bankruptcy, normally in the last ten years. Some people think that a lender is much more likely to lend to you if you have filed for bankruptcy as they enjoy the protection of knowing that you are not allowed to file again for several years. This however is not true and filing for bankruptcy is seen as a red flag by the finance and credit card companies showing that you have already demonstrated a tendency to get yourself in over your head when it comes to handling your finances.
Your credit report is a very important document that you should not only understand but that you ought to review occasionally for your own protection. Happily, the law requires that you be given a copy of your personal credit report once a year if you request it and the first thing that you need to acquaint yourself with is how to obtain your free annual credit report. Having gotten your report you then have to study it carefully to ensure that it is accurate and then to request that it be changed if it is not. In addition, there are some circumstances in which you can ask for alterations to your credit report, even when it is accurate, and here you will have to have the answers to hand for questions like how can I remove a judgment from my credit report?