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How does the credit report influence you?

By Janet Lacey
Published: Friday, October 2nd, 2009

The credit report is a financial document that holds information regarding all of your financial behaviour. It holds details of any credit you have ever taken including any loans, credit cards and any other from of credit. It also has information regarding your payments and how accurate you were. It shows any bankruptcy filings or tax liens you might have had. Thus a credit report is a concise summary of who you are financially.

When you apply for a new credit, the lender wants to check on you. He wants to know your willingness to repay the loan. Basically he wants to know the probability of you paying off your obligations without hassle. He requests your credit report from a credit agency to gauge your financial dependability. There are three main agencies in the United States that offer you credit reports. These are TransUnion, Experian and Equifax. These agencies have to give you a free credit report every year. Make use of this facility and keep a tab on your credit report. The lender checks your financial history and checks if you are reliable enough to give you a new credit. He checks if you have been efficient enough in repayments in the past. Thus, the credit report holds the key to whether you get a new loan or a credit card or not.

As the credit report is very important, maintaining a good credit report is very important. Credit information is sent over to agencies in a timely fashion, usually once a month. Most people have a credit report from a very young age. If you have a credit card or even a store card, you will have a credit history and a credit report. Thus, plan your financial behaviour carefully from when you start spending. Every single aspect of your life can be hampered by bad credit.

A student loan can be rejected due to your bad credit history. If you do manage to get your hands on a loan, the interest rates might be too high for you to be able to afford it. You might not be able to pick a house in the locality you choose. You might not be cleared for the mortgage or the rates might be too high. The same holds true if you are renting as well. A bad credit history might deny you the chance of living in the locality of your choice. Thus you will have to compromise on a lot of things if you have a bad credit history. It is a good idea to monitor your credit history closely. You are entitled to three free credit reports from the three agencies every year. Make use of this offer and keep a tab on your credit reports.

It is bad enough if your mistakes cost you a good credit score. There are possibilities of mistakes happening on your credit report. Check the report regularly to ensure there are no mistakes and if you find any dispute it immediately. Do not over charge on your credit cards and keep the number of credit cards to a minimum. Make payments efficiently and do not tarry.

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