Your Credit History
Your credit history. Three simple words that
can determine the outcome of our financial success. Your credit history
influences any and all decisions that a company or institution will make
when considering you as a credit risk. Because of its importance, knowing
and understanding what your credit report says about you is vital.
Your Credit Report
Your credit report is a document that will
show your personal and financial information, good and bad. Your score
is based on this information and is called your FICO score. The higher
the FICO score the better. This information is reported by all three major
credit bureaus, Equifax, Experian (formerly TRW), and TransUnion. Any time
you apply for credit of any kind, the lender will contact one of these
credit bureaus to obtain a copy of your credit report.
This all sounds pretty technical but what
it boils down to is this, your credit score will influence all future financial
decisions. That is why it is so vitally important that you keep track of
your score and read your report regularly. Mistakes can and have been made.
Keeping track of your report will help you to find these mistakes and resolve
them in a timely manner.
What Your Score Means For You
Pretty much everything. As I mentioned
above, your credit score will influence the decisions that companies make
when you apply for credit. If your credit is less than perfect, you may
be turned down or at least given a higher interest rate than someone who
has a higher score. Problems can stay on your report for as long as two
years even after they have been resolved.
What Influences Your Score
Your payment history is one of the main
influences. Have you paid your bills on time? If you have routinely been
late with payments, your score will be negatively affected.
How much outstanding debt you have is also
a factor. This includes the outstanding balance on any loans you may have
as well as the credit limits on any credit cards you may have. If you have
multiple credit cards and these cards all have high credit limits, even
if you don't carry a balance on these cards, the possibility still exists
that you will someday charge all these cards to their limits. This possibility
alone will negatively affect your credit score.
The length of your credit history is also
a factor. Surprisingly, no credit history can work against you. With nothing
to go on, the company has no idea as to just how you will handle your credit.
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Obtaining Your Report
Since January of 2004, all credit bureaus
are required to give you one copy of your credit report for free each year.
Although the credit report is free, they can charge you for your FICO score.
Contact any of the major credit bureaus either online or by phone and see
what their policy is.
Author-Bio: Keith Baxter made it his mission
after college to educate as many people as possible to the advantages and
disadvantages of credit through a widespread re-education initiative. You
can find out more about Keith and what he's up to at http://www.thebankcreditcardlist.com.
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