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What Does Your Credit Report Says About You?

By • Oct 30th, 2008 • Category: Credit

202px WeTakeCreditDebitCardsCrop What Does Your Credit Report Says About You?

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You almost certainly know only too well that the information in your credit report is used by the loan and credit card companies when deciding whether to extend credit to you, but are you aware of just what information your personal credit report contains? Did you know for example that the information contained in your personal credit report could influence whether or not you are able to purchase that new house or are going to have to remain in your current ‘shoebox’?

In a lot of cases people believe that if a lender looks at your credit report they are merely looking to see your credit score and, while this is unquestionably one of the things that they do look at, they are also looking at a great deal more. In particular, they are looking at how much debt you have in comparison to your income and even relatively small accounts, such as those with a mail order catalogue company, will be considered as an income deduction when considering a request for a loan.

If a lender determines that you have more money going out than you have coming in then your loan request will undoubtedly be turned down. In fact, the law requires that a certain percentage of your income has to be available to meet the payments on a loan before the lender is allowed to approve it, regardless of the reason for the loan.

Lenders are also looking back at your credit history over the last seven years to see how you have managed any loans during that period. Specifically, they will look to see if you have made payments on time and will play close attention to any payments which you made more than thirty days late. It may not have appeared particularly important to you at the time that you got into difficulty and were late making payments for several months on an account, but any new lender is certainly going to consider this when assessing the risk of lending to you now.

Lenders will also look to see whether any of your accounts have run into debt during the last seven years and whether these debts have now been cleared. If you have payments outstanding on a current loan agreement lenders will be very wary about giving you further credit before these are paid off.

Finally, your personal credit report will show if you have filed for bankruptcy, generally within the previous ten years. Some people think that a company is much more likely to advance you credit if you have filed for bankruptcy as they have the added protection of knowing that you may not file again for a number of years. This however is not the case and filing for bankruptcy is viewed as a warning flag by the finance and credit card companies showing that you have already demonstrated a tendency to get yourself in over your head when handling your finances.

Your credit report is a very important document and one which you ought not only to understand but that you should review occasionally for your own protection and peace of mind. Luckily, the law requires that you be sent a copy of your personal credit report once each year on request and the first thing you need to acquaint yourself with is how to obtain your free annual credit report. Once you have got your report you then have to look through it with care to ensure that it is accurate and to request that it be changed if it is not. Furthermore, there are some instances in which you can ask for alterations to your report, even when it is correct, and here you will have to have the answers to hand for questions like how can I remove a judgment from my credit report?

 What Does Your Credit Report Says About You?

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2 Responses »

  1. [...] What Does Your Credit Report Says About You? [...]

  2. [...] It is far better though to do the check before applying for the credit – close the sable door before the horse bolts! Credit reference agencies allow you to check your report online and there are many systems about that will give you regular updates as things change on your credit report. [...]

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