Almost everybody has a busy lifestyle these days, and in a world where time has now become a luxury, various organizations have tried to work around your work schedule, to make life a bit easier. Credit card bills come right to your doorstep, any payments that need to be made on a monthly basis can get automatically deducted from your account and so on. Sometimes, it gets difficult to track exactly where the money is going. Which is why, we can all have a credit report to rely on.
A credit report simply has credit scores, which have been calculated using maths. It calculates how efficiently your bills can be paid. Also, there are more instructions about any lawsuits that you may have been involved in, the kinds of bills you pay, whether you have filed for bankruptcy, credit cards, loans of any kind and any other debt.
In short, a credit report tells you about all your finances. Some points of importance which are included are whether any late payments have been made and their details, and also by how long the payments were late. Personal details such as phone number, social security numbers and address are all recorded. Applying for a credit card does not take much time and involves giving out some personal details such as name, address, social security number and so on. Details of payments that you may be making on a monthly basis are also important.
So why should you give out so many personal details of yours, which could be very easily misused, just for a report? The answer lies in the importance of the report. Today, all banks and financial institutions demand to see some kind of a proof regarding your personal details and also a financial report to gauge your status and credibility. No bank will want to give out a mortgage loan to a person who does not have a steady income or who spends more than he earns. To a very large extent, any kind of loan applied for, is based on the credit report. The accuracy of the report is the most important thing to be noted and taken care of. On the other hand, there is always the chance of your personal information being misused. Having a credit report with personal details in it, ensures that nobody can send their bills to you. Imagine a situation where somebody has opened a bank account in your name or has used a credit card in your name. You would find the bills that you had nothing to do with in the first place being mailed to you. Hen there is proof of your actual identity; it is easier to nail such fraudsters and to protect yourself.
How does one calculate a credit score? 35% of the score depends on your payment history which means that late payments would take a toll on this rating. Another 30% depends on the debts that you have, such as a car loan, credit card debt and so on. If you have a lot of debts that need to be cleared it would show in the rating. 15% of the score depends on the time for which you have had credit. 10 % of the score depends on the number of inquiries that have been made of your rating. Too many inquiries would have a negative effect. Lastly 10 % of the score is based on the number of credit cards and the amount available in each card that you own.
Although there are many clauses and information given in a report, there are a few clauses which should be of utmost importance to you.
- Credit Score – A credit score given to you based on your finances is always accompanied by a list of reasons as to why you got the score. If you find that you have a low score, make sure you understand why. A low score would mean that it will be harder to get any loan that you might need.
- Public Records – This refers to any bankruptcy filed, any lawsuits against you, collections etc. It is important to read the dates carefully against any public record and also the reasons. A wrong date would only work matters against you. Make sure any latest detail is also added, for example the settlement of a recent lawsuit.
- Trade Lines – This lists the different accounts that you have along with the particular account number. There are also bigger details such as balance in the account, credit limits, monthly payments, and any late payments if any.
- Inquiries – This lets you know who has applied for a list of your credit report. This should be a very crucial thing for you. In most cases you would find that if you have applied for a loan, or something of that kind, a bank, a credit card company, or even an employer might ask for your details. If you find that a stranger who has nothing to do with you has asked for your details, chances are that it might just be a fraudster.
Remember that there are times when a data can be reported wrongly, or some details which can be inaccurate. It is important that you inform a consumer information company through an official letter of the same so that any inaccuracies can be investigated properly. Moreover, if you feel that an inaccuracy interferes with any information that might be important to a moneylender or a bank, it is important to remind them of the same. The may also send in an inquiry to the consumer information company so that the data which you feel is wrong can be verified.
Since a credit score is so important, how does one work on improving it? Firstly, being in control of your finances is important. Do not overuse your credit card and exhaust the balance. Also, try maintaining only a few accounts ensuring that you make your payments on time and not default. Lastly, try having as few inquiries as possible.