Understanding your credit report can help you know what creditors are looking for? Discover the most information on credit reports and how to get your free credit scores below.
Interpreting this report is something that everyone in the world should learn to do. Having this bit of knowledge will prepare you to correct or improve your credit score if it is not stellar.
What are these reports? It is a list of information about you. It shows a history of all those you owe money to and those who you have owed in the past. It also shows if you are current on your bills or past due.
It will even give what your current balances are. This allows creditors to see what kind of bill payer you are and if you may be over extended. What do I mean by that? You have too much credit extended to you. Thus you may have difficulty paying on any new credit.
Understanding these financial reports is important because each time you apply for credit, whether that is for a home or car loan, new credit card, or personal loan, the lender will take a look at your credit history. This inquiry is simply to determine what type of risk they are taking by lending money to you. The only way they can do that is by taking a look at your history of paying back loans. Thus a file is created on you and this file is called your credit report.
By understanding credit reports you have the opportunity to improve your credit score if needed. There are a number of reasons a person would want to have a good credit rating. The first reason is so that you can secure a home or car loan, or borrow money for other purposes. It also influences the amount of interest you will have to pay, and that affects monthly payments.
Creditors send timely updates to the reporting agencies. Most times these are updated monthly. So your report is always changing. Sometimes, when you pay off a debt, they take a while to update that. Not sure why, but that is something I watch for when I review my reports.
Creditors have a right to know if they can expect to be repaid for the money they lend, and therefore people having a bad credit score sometimes find it impossible to get a loan. A credit score can be thought of a similar to a photo, or snapshot, and they always say a picture is worth a thousand words.
Your FICO score is the primary credit scoring system used by creditors, and it is based on information gathered from reporting agencies. However, not only can your creditors use it to help them make better decisions when lending money, you can also benefit from reviewing them.
When you learn how to read and understand the information found on your credit report, and then take deliberate action to either keep it in good shape, or repair damaged credit, the result will be greater access to loans when you need them. That will save a lot of money and leave you with more in your bank account to spend however you want.
With the Fair Credit Reporting Act, you can get a copy of your report whenever you are denied credit. So be sure to take advantage of that. You only have 60 days after denied to do that in.
Once a year you can get a free copy of your credit report from the reporting agencies. This way you can see if everything is being reported properly.
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