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Should we care about credit reports?

By admin
Published: Wednesday, December 22nd, 2010

You should not wait until you are applying for a house mortgage or a loan before checking the status of your credit report.  Once you apply for a loan, it gives the lending company or the mortgage company the right to take a close look at your credit history. Your history will make or break you. If your report is clean, like bills are always paid on time, then you have a good chance of getting your mortgage. But if in case your credit report shows that you always make late payments on your credit card bills, then you will be considered as a risk. Financial institutions will be scared to approve your loan.

Since you have to check your credit history all the time and the government only allows you to have a copy of it once a year, you might as well look for ways to get hold of it at least quarterly. There are some companies which can provide us of our credit scores. Some people do not care while some people really want to see the flow of their credit. The importance of checking your credit report regularly is you can save yourself from a lot of trouble if in case there is a mistake. If there is something on your report that you do not know of, like an unfamiliar purchase, you would be able to correct it immediately. Wait for one year and that purchase would be accumulating tons and tons of interest.

Let us not be confused on the difference between credit reports and credit score. A credit report is a document stating your whole credit history (from loans 10 years up to the present), while a credit score is the 3-digit number signifying how good or how bad your credit history is. Both credit score and credit report affects your life tremendously. Even your future job can be influenced by your credit record. If you apply for a job, the application manager of the company will check your credit history. Once they learn that you have a handled your finances responsibly, the chances of getting hired will be higher. On the other hand, if your credit history shows a poor credit reputation, do not expect them to call you again. Having a good credit score will mean that you are a responsible person; a bad credit score will mean the exact opposite.

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