Your Personal Credit Report
Your credit report is your life. Do you now what's on your report? Most people don't, in fact over 75% of you have never even seen your personal credit report. Big mistake. Why would you not want to know what's on the one document that will ultimately control your financial destiny?
What, exactly, is on your personal credit report? For starters, all you personal information: name, address, date of birth, social security number, plus residence and employment history for up to ten years. If you are married this will apply to your spouse as well.
All your account information, also know as "trade lines", comes next. This includes the date these accounts were opened, your payment history (on time or 30/60/90 days late), credit limit, account balance and negative actions taken such as charge offs, collections, foreclosures and repossessions. All this information is provided to the credit reporting agencies by the lenders.
Public record information and recent credit inquires are also included in your credit report. Bankruptcies, judgments, and liens are examples of public record information. Credit reporting agencies buy this information from people who comb through the public records. Any credit inquires will appear on your report for two years. Too many inquires could have an adverse effect on your rating.
Finally, your credit "score". Perhaps the most important determining factor in getting a favorable credit decision. Most lenders will look at your score first to assess whether or not you meet their underwriting guidelines. A score above 700 essentially means you will get the credit you need when you need it. A score below 500 means no one will lend you a dime. Now, just how is your score determined? A mathematical formula that takes in all aspects of your life is in use here. Obviously the payment history on the accounts you now have play a big role, but many other factors are also looked at and can overshadow a good payment history.
The following will increase your score:
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Paying on a mortgage to buy a home
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Having less than six credit cards
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More than three years at the same job
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Professional or managerial employment
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Having a college degree
Conversely the following can decrease your score:
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Renting rather than buying your home
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Having more than six credit cards
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Credit cards at or close to limit
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Frequent job changes
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Skilled or unskilled manual employment
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Being self employed
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Lack of college education
These are only some of the factors used to determine your credit score. There are many others. The exact method used to arrive at your score is a well kept secret.
It is vital that you review your credit report annually, preferably from all three reporting agencies: Trans Union, Equifax and Experian. Errors on credit reports are not unusual anymore and will be much easier to get corrected if caught in a timely manner. Remember your credit report is your financial lifeline. You must do whatever is necessary to protect it and yourself.
Understanding Your Personal Credit Report
The True Cost of Bad Credit Loans