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Essential Things to Understand about Your Credit Report

By Karen Anderson
Published: Wednesday, March 31st, 2010

Credit report conveys the history of your dealings with creditors. You need to look closely to your credit history. There’s information there that may seem innocent to you but not to potential creditors.

Taking care of this relevant information in your credit report would make your credit or loan application successful. Take also into consideration credit report tips that will be discussed in this article.

Your number of inquiries every time you apply for a credit card matters. For instance you would request to get a free travel mug, duffel bag, or T-shirt that would only add to your hard inquiry to your credit report. Your potential lender would understand these inquiries that you’re either in some financial situation where you need a lot of credit, or are planning to take on a large debt.

Some experts say that if you have 10 credit card inquiries in six months, that will probably scare a lender. Others experts say that as few as six credit card inquiries in six months can label you as risky.

As a credit report tip, minimize making hard inquiries that would only make you a high credit risk. Take note that you should make inquires that older than six months before the date you planned to apply for a new credit. The newer inquiries might lead the lender to think that you actually have the credit accounts available now but they haven’t shown up on the credit report yet

The numbers of credit accounts that you used matter. Just as with the hard inquiries, these can indicate to a potential lender that you could easily put yourself into financial danger with all of that readily available credit. As a credit report tip, it is healthy that you maintain four to six credit cards only to keep your credit score and debt balances healthy.

Most importantly, close the accounts you do not use. You would avoid excessive available credit. You are also limiting the possibility of becoming an identity theft victim. You must contact your credit provider and ask to close the account.

Your payment history really matters. Delinquencies of payments of your credit would stay on your report for seven years. Realize the importance of maintaining good paying attitude to make sure that did not missed any payments. The credit report tip you would do is to make a habit to pay on time because charge-off collection collections also stays for seven years on your credit report.

Take a look about your debt-to-income ratio. Potential lenders would be sacred if you have unsecured credit card debt that is more than 20 percent of your annual income. It has high possibility that they would not give you the best deal on a loan. As a credit report tip, reduce your debt in relation to your income. This way, you’ll able to get better rates on the loans you search for.

Your potential lenders are very vigilant about the information in your credit report. Always manage to maintain a good credit history before you apply for another credit or loans.

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