----------------------------------------------------------------------------------------
Understanding Your Credit RatingIn order to understand your credit rating, it is essential to know what information is on a credit report and what that information means. Credit reports can seem rather confusing the first time you look at them, but it just takes a little getting used to. And, understanding these reports is one important step toward gaining control of your finances.
The Parts of the Credit Report
There are four main components to a credit report:
· Personal Information
· Credit History
· Public Information
· Inquiries
Personal Information
Personal Information will include your name, your spouse’s name if applicable, your mailing address, residential address if different, your social security number, employment history, and any other residences if you have moved within the past few years.
A person who has switched jobs frequently and moved addresses regularly may be considered to be a high risk. Banks and other financial institutions need this information to research why a person has moved around frequently. They can also use this information to track if you have unpaid loans that you walked away from by changing your address and not leaving a forwarding address.
Credit History
Your Credit History includes all loans, credit cards, and mortgages that have been in your name for the past ten years. Whether the account is closed or open, the information will be included on the report. Late payments of over thirty days do show up as well, so it is important to make your payments on time. The credit history also lists how much money is due on each of your accounts, the last payment you made, and how much of a credit line exists in the account.
It is important to pay close attention to your credit history. This is the area that most financial institutions scour when deciding whether or not they will approve your loan. They are looking for repeated late payments and unpaid loans that may go into default.
Public Information
Public Information includes a listing of any debt consolidation, bankruptcy, or restructuring programs you have used in the past decade. Obviously, if you have been in debt, a financial institution feels that you are extremely high risk. You can still get your loan, however, but a high-risk interest rate will probably be applied.
Inquiries
Inquiries show any organization or company that has looked into your credit report. This can clue financial institutions into whether you are attempting to gain additional credit cards, loans, or other lines of credit. Banks need to know if you are attempting to borrow more than they feel you can afford. Therefore, a large number of inquiries will reflect negatively on you when applying for a loan.
Your credit report can make it hard for you or easy for you to get a loan, credit card, or mortgage – it all depends on how good your credit rating is. To keep your credit rating strong, it is important to check your credit report yearly and ensure that the credit history is truly yours and not someone else’s.
----------------------------------------------------------------------------------------
|
|
|
Username:
apollo
Profile:
Mozaics by this user:
|
|
