Check my Credit - How
important is my credit score?
You should check your credit report every 3 to 6
months to assure there are no discrepancies and look for signs of identity
theft. A rising crime that is hard to bounce back from.
Checking your credit score is a quick and easy way to find out how
you're doing. In the industry, your credit score is often referred to
as your FICO (Fair, Isaac and Company) score. Lenders use this to assess
your credit worthiness. Typically, the higher your score, the lower risk
you present. Most of the time, lenders will reward good credit applicants with a lower
lending rate.
Because of this, keeping a close check on your credit score is
important. It can alert you if you need to manage your credit more
carefully, or if there is any false information that can mistakenly lower
your score.
Under the Fair Credit Reporting Act, accurate information can stay on
credit reports for up to seven years. But how can you ensure what's on
there is indeed accurate? By performing a simple check-up.
In the past, credit bureaus and other companies would not share this
information with consumers. But due to the passage of several recent laws,
you can view your credit score for free. It's better to do this before you
apply for a loan, giving you time to clear up any problems beforehand.
Review your Credit Report for Free -
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Repairing Your Credit Score
So once you know your credit score, what then? If it's relatively high,
you'll have a better idea what type of rate you should receive (and
deserve) at lenders. Plus, it also offers peace of mind. Everyone likes to
know everything is proceeding smoothly, and this is one way to make sure.
But what can you do to repair your credit if the information in your
credit report is correct (but the score is less than perfect)? Don't
worry. You have options.
A credit counselor can act as a mediator between you and your lenders.
Credit Reports: Things To Watch Out For
Be wary of any credit counseling company that makes promises that sound
too good to be true. A sign that should raise a red flag includes paying
for credit repair services before any credit counseling services are
provided. Another to watch out for is suggesting you erase your old
identity and start anew.
In reality, no one can instantly (and legally) remove accurate, but
damaging information from a credit report. There are only two ways to
ensure this happens: Either work out a payment plan that you can meet, or
allow enough time to go by (usually this is seven years, but it can go up
to ten years for reporting a bankruptcy).
Again, before you make a move, it's important to know your credit score
first.
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What is on my Credit Report?
What does your rap sheet say about you? It reveals how prompt you are
in paying back loans, how much money you could borrow should you decide to
go on a spending bender, and how many times you've applied for credit.
What it does not reveal is your salary, business debts (unless you
personally guaranteed a loan), and whether or not you're a generous
tipper.
Your credit record also might not reflect all of your credit accounts
-- such as travel, entertainment, gasoline card companies, and credit
unions -- since some of these creditors do not supply information to the
credit reporting agencies. Your deposit information, such as your saving's
account kitty, are not part of your credit report. An individual credit
report does not contain your FICO score, as calculated by Fair, Isaac.
Here's a rundown of what you'll see on your credit report from the big
three consumer credit reporting agencies (Equifax, TransUnion, and
Experian).
Identifying information
Obviously your name, address, phone number, and Social Security number
appear on your credit report. But the report may also include a list of
your current and previous employers, and even previous home addresses.
Your credit history
Your credit history is the centerpiece of your credit report. It
includes a breakdown of your debt -- including:
- Late payments (30 days and longer)
- Outstanding debt (the amount owed, or size of payments for
installment loans)
- The total amount of credit currently available to you (e.g., if you
have a credit card with a credit limit of $8,000, even if you only use
$1,000 or so of it a month)
These items will appear for all of your accounts (or institutions that
have extended credit to you), including banks, credit card companies,
mortgage lenders, auto-finance companies. These items will remain on your
credit report for up to seven years.
Any public records
Public records include any filings of personal bankruptcy or court
judgments against you. For example, if you do not pay your property taxes
(tsk, tsk), your record will probably show that the local property tax
board has filed a lien against you. These items remain on your credit
report for seven years, except bankruptcies, which remain on your credit
report for 10 years.
Inquiries into your credit
Whenever you or someone else (be it a bank, potential employer, etc.)
checks your credit report, it shows up in your file as an "inquiry." There
are two types of inquiries: hard and soft. Hard inquiries come mainly from
lenders from whom you are seeking a loan. They look at your report to see
what kind of credit risk you pose. If you're in good shape, and you get
the loan, a hard inquiry will do no harm. If you apply for a bunch of
credit at one time, however, prospective lenders may see that as a sign of
desperation (or that you're going to try to make a run on the credit
system).
If you are shopping rates for a mortgage, your report may reveal a
cluster of hard inquiries. In the eyes of credit scorers (like FICO), this
should not count against you, as long as you do your inquiries in a
concentrated period of time (say, during a one-month period). When you are
shopping around, ask the lender if they are going to make a hard inquiry
to your credit report.
A soft inquiry will show up when you request a copy of your credit
report, for instance. Soft inquiries do not stay on your credit report.
Getting the whole picture
Unfortunately, the three major credit bureaus don't always have the
same information. Some lenders report information to just one or two of
the credit bureaus. So for a truly accurate take on your credit situation,
you'll have to get copies of your reports from all three bureaus, or order
a 3-bureau credit report from one of the third-party vendors who gathers
all the information. Your individual credit report also does not include
your FICO (or other) credit score, which is a serious shortcoming since
it's what lenders rely most heavily on when deciding whether to give you a
loan. You'll have to pay an extra fee to get your credit score. Your
overall credit score is based on all of the items that appear on your
credit report. So if you want to raise your overall credit GPA, start with
your credit report(s) and work from there.
In the end you decide if a single credit report is adequate for your
sleuthing. And remember, if you want to raise your overall credit GPA,
start with your credit report(s) and work from there.
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