Your Credit Report
Your credit report gives creditors information about your
credit history. Creditors use the report as a tool for credit
making decisions. Credit reports contain information about
your bill paying habits, employment stability, and debt to
income ration. The information in your credit report is assigned
a grade or score, which objectively predicts how likely you
are to use credit responsibly (i.e. repay your debt in a timely
fashion). Credit reports also help creditors decide the terms
of any credit that may be extended to you. For example, if
your credit report reflects late payment, a creditor may offer
you credit, but at higher interest rates. You will pay more
for the privilege of credit if you carry a balance. Over time,
credit extended at higher interest rates can cost thousands
of dollars more than credit extended at a lower interest rate.
Reviewing your credit report
You should check your credit report at least
once each year. When you receive the report, it is important
to make certain that the information it contains is correct.
If you discover errors, you must report them, in writing,
to the appropriate creditor. Reviewing your credit report
can help you determine if there are problems you need to address
before you apply for a home loan or credit card. You may also
want to review your credit report if you have been denied
credit recently. Creditors are required, by law, to provide
a specific reason for the denial. In addition to late payments,
other things that reflect negatively on your credit worthiness
include: credit balances that are very close to your credit
limit; a short credit history; and many recent applications
for credit. It is best to correct the problem or problems
before making any other applications. |
