How Much Do You Know About Your Personal Credit Report?
Your credit report is critical to any decision to extend you a line of credit and it is very important to understand just what your report is and how you can influence the story it tells to a lender.
Many people believe that if a company looks at your personal credit report that company is simply looking at your credit score and, although this is unquestionably one of the things that they do look at, they are in fact looking at much more. Above all, they are looking at the amount of debt you have compared to your income and even fairly small accounts, like those with a mail order catalogue company, will be considered as an income deduction when considering a request for a loan.
If a credit card company, bank or other lender concludes that you have got less money coming in than you have going out then your request will undoubtedly be turned down. In fact, the law requires that a certain percentage of your income must be available to meet the payments on a loan before the lender is allowed to approve it, whatever the purpose of the loan.
Lenders are also looking at your credit history for the last seven years to see how you have managed loans in existence during that period. In particular, they are looking to see if you have made your payments on time and will take note of any payments which you made more than thirty days late. It might not have seemed particularly important to you at the time that you ran into a few problems and were late making payments for a few months on an account, however any lender is certainly going to 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 over the last seven years and ifthese debts have now been paid. If there are payments outstanding on an existing loan agreement credit card companies and other lenders will be very wary when it comes to giving you further credit until these are paid off.
Finally, your credit report will also show if you have filed for bankruptcy, in most cases within the past ten years. A few people believe that a company is far more likely to lend to you if you have filed for bankruptcy as they enjoy the added protection of knowing that you may not file again for a number of years. This however is not the case and filing for personal bankruptcy is viewed as a red warning flag by the credit card and finance companies indicating 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 and one which you ought not only to understand but which you should review from time to time for your own protection and peace of mind. Fortunately, the law requires that you be sent a copy of your credit report once every year if you ask for it.
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