How Important Is It To Understand Your Personal Credit Report?

You doubtless know all too well that the information in your personal credit report is used by the credit card and finance companies when considering whether or not to extend credit to you, but do you know exactly what is actually in your personal credit report? Did you know for example that the information that are contained in your credit report could affect whether or not you are able to buy a new home or will need to stay in your present 'shoebox'?

In many cases people think that if a lender looks at your credit report they are just looking to see your credit score and, while this is without doubt one thing that they do look at, they are alsp looking at far more. In particular, lenders are looking at how much debt you have compared to your income and even quite small accounts, such as those with a mail order catalogue company, will be treated as an income deduction when when it comes to considering a loan application.

If a credit card company or other lender decides that you have more money going out than you have coming in then your application will automatically be reject. Indeed, the law requires that a specified percentage of your income has got to be available to meet loan payments before the lender is allowed to approve it, whatever the purpose of the loan.

A lender are also looking back at your credit history for the last seven years to see how you have handled loans in existence during that period. In particular, they will look to see if you have made payments on time and will play close attention to any payments that you made more than thirty days late. It may not have seemed especially important to you when you ran into a few problems and were late making payments for a few months on one of your accounts, but a lender is certainly going to consider this when assessing the risk of lending to you now.

A lender is also going to see whether any of your accounts have run into debt over the last seven years and if these debts have now been paid off. If you have payments outstanding on an existing agreement credit card companies and other lenders will be very wary about giving you additional credit before these are cleared.

Finally, your personal credit report will also show if you have filed for bankruptcy, usually in the previous ten years. Some people think that a lender is more likely to lend to you if you have filed for bankruptcy as they have the protection of knowing that you cannot file again for several years. However, this is not the case and filing for personal bankruptcy is viewed by lenders as a warning flag indicating that you have already shown a tendency to get yourself in over your head when handling your finances.

Your personal credit report is a very important document and one which you ought not only to understand but that you ought to review occasionally for your own protection. Fortunately, the law requires that you be sent a copy of your personal credit report once a year if you request it.

Your personal credit report is central to any decision to extend you a line of credit and it is extremely important to know just what your report is and how you can influence the story it tells to a lender.

TheDebtAssistanceCenter.com provides information on how to obtain your free annual credit report and answers a wide range of questions such as how can I remove a judgment from my credit report?

Article Source: http://www.positivearticles.com. PositiveArticles.Com does not vouch for or necessarily endorse the contents of this article.

If you are copying this article for publishing on a website or ezine, please use the "Ezine Ready" button from the righthand menu.

Article Search

Home

	Print This Article
	Add To Favorites
	Ezine Ready