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Credit reports have become immensely important to a person’s financial life. It works more or less like a patient’s history. Everything there is to know about ones credit standing is in there. Past loan applications, credit card applications, late payments, a possible bankruptcy, everything. Not many people know how important credit reports are. Almost all lenders and financial institutions use this as the common criteria for loan approval.
If you want to have a successful financial life, or if you were once deep in debt and your credit standing took the blow and now you are back on your feet, you should be extremely familiar with your credit report.
The Importance Of Your Credit Report
Your credit report and your credit score go hand by hand. There is not one without the other. Your credit score is a numerical reflection of your report and it can range between 450 and 850, being the latter the perfect score and the reflection of a spotless credit history. Negative inputs will appear on your report if you start making late payments, miss payments or file for bankruptcy. These negative inputs will lower your credit score progressively and some of them will even stay on your report for years. For example, a bankruptcy claim, even if it has been discharged, will stay on your history from 7 to 10 years.
Most lenders will approve or decline a loan applicant based on their credit score and history, this is why it is so important to maintain a fairly high score. If yours is low, it does not mean you will not be able to obtain the kind of finance you need, but it will certainly be harder to find. Low credit scores usually mean higher interest rates, lower loan sums and thus less favourable loan terms.
Get A Free Credit Report
There are three major credit report agencies. These are Equifax, Trans Union and Experian. By law, you are entitled to a free annual copy of your credit report. How can you get these copies? It is simple, you will have to mail the three agencies a request form with your personal information, including full name, address, date of birth and social security number. Do not forget to include the requested information as it will result on you not getting the copy at all. The copies should arrive at your mail box in approximately two weeks.
Checking out your credit report once a year is not enough. It should be done on a regular basis, at least two times a year. Additional copies, unfortunately, are not for free, but they are not expensive either.
Check Your Credit Report Out
Now that you have your credit report with you, it is advisable to check it out for mistakes. Do not assume that the every single input on your report is correct, because mistakes are not unheard of and sadly fairly common. Only in 2007, it was reported that 75% of the reports had at least one mistake on it, are you still thinking on taking accuracy for granted?
Credit history mistakes can and must be corrected. This ensures that your score is fair. The process by which mistakes are fixed might be tedious, but it is well worth the effort.
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