Looking at your credit report is something that you need to do on a regular basis. For those that are new to the world of personal finance, a credit report is simply the history of credit that you’ve enjoyed so far. It’s a documentation of all of the mortgages, credit cards, and cell phone agreements that you’ve enjoyed up to a certain point. As long as you know what’s in your credit report, you’ll be able to make smarter financial decisions. If you’re nervous about finding out what’s in your credit file, don’t worry — it’s not there to scare you. If anything, it’s there to let you know where you stand with lenders.
The truth of the matter is that the lender doesn’t know you from anyone else. They can’t tell that you’re a good person because they can’t spend time with you. They can’t understand all of the little sacrifices that you’ve made for your family, and it doesn’t really matter if you’ve given heavily to charity. The truth is that the credit report is designed to be a universal way for people to stand equally in the eyes of lenders. It’s not about what you look like or what type of education you received. It’s about who pays their debts on time, who builds their credit properly, and who weighs themselves down with debt that they cannot afford to repay.
There’s a lot of information in a credit report, but it’s kept confidential. Your friends cannot just request a copy of your credit report, and information from it cannot be released to them. Lenders have to keep your information private unless you give them permission to share it.
When you pay your bills on time, you have good credit reporting. This makes lenders feel more comfortable offering you finance terms, such as what you would expect for a car or another item. Building up good credit is the only way that you’ll get the best credit terms. Of course, you will find lenders that are willing to extend an offer of credit to you if your credit is less than perfect, but they will end up charging you a lot of interest. The higher you are as a credit risk, the most likely it is that they will not give you the type of credit that you’re really after. For example, if you see ads for 0 percent interest credit cards, they’re really aimed at people that have stellar credit. if you don’t have that, then you’re going to be looking at offers that just aren’t that great.
When it comes to your credit report, the level of information is pretty deep. Not only do you have your current address reported, but it’ll also show Court Judgments, bankruptcies, and any Individual Voluntary Arrangements.
What else that we found interesting (that many people overlook) is that a credit report lists people who have a financial connection with you. So if you take out a joint mortgage with your spouse, your credit report is linked to theirs and vice versa. This means that lenders will automatically look up their credit history in the future when you apply for credit, as their situation may affect your ability to pay. If they default on something that you both signed for, then you’re on the hook for those payments. Lenders have to calculate in how likely that is to happen before they can give you credit of any kind.
Lenders share what you owe and whether or not you’ve paid on time. Just one missed payment can really mess with your credit score, so it’s best to pay things early if you can help it. There’s usually no penalty to paying things early, and it can make you look good in the eyes of your future and current lenders alike.
If you’ve changed jobs often or moved around, your credit report might not be correct. This is why it never hurts to look over your credit report at least once a quarter. This way, you can make sure that the information has remained as fresh as possible. This is even more important before you get ready to apply for a mortgage. Make sure that you are aware of all of your financial information, as your credit has more power than you think!