Thursday, January 5, 2012, AM | Leave Comment
One of the best ways to improve credit is to ask for your free credit report, study it and find ways to improve the credit score. This blog and quite a few others have tons of articles about how to go about it.
We, the consumers, move throughout life without knowing what type of impact our credit report can have on our financial well-being.
Once you get your credit report, you will realize that either you can continue enjoying some of the finest things in life if your credit score is high or it can make your financial life a bit of a struggle if your credit score is low.
It’s important that we all take responsibility by paying all our bills, including utility, credit card, mortgage and others, on time so billing companies will have no reason to report to the three credit bureaus if you miss a few payments. You can be denied unemployment if you have bad credit history.
With good credit, you would be able to qualify for the best interest rates when you get your new credit card, car loan or mortgage. Your job opportunities will increase if you handle your credit properly and efficiently resulting in improving your credit report.
The importance of credit report
First off, your credit report is a snapshot of your payment history. It has information from the day you applied for your first credit card to how many more you acquired and whether you have made prompt payment every time you received the bill. It will show positive as well as negative points you may have accrued.
To be on top of your financial well-being, it’s a good practice to get the report at least twice a year if not more frequently. Not only you will be able to examine your credit history but you will know also if your identity has been compromised. You will be able to call the credit bureaus and correct the information if you find some discrepancies in your report.
Your credit report allows you to be always in a position to know your credit score in case you want to apply for credit card, auto, mortgage or any personal loan. Before applying for any of these loans (credit card is a loan as well), you will have a chance to review the negative points if any and fix those items.
How Credit Bureaus collect information?
All creditors report to the credit bureaus when you pay your bills promptly or if you miss a payment. Therefore, it may generate positive or negative points. Collection agencies, obviously, report negative information if they don’t get what they want within a certain period of time.
When you notice negative information on your credit report, you might be able to fix it by calling directly to bureaus. Otherwise, the negative information stays on the report till the statute of limitation expires in which case the item must be deleted from your credit report, according to the Fair Credit Reporting Act. The statute of limitation starts 180 days from the date the account became delinquent.
Who uses information on your credit report?
Almost any institution you can think of. Not only the lending folks but your potential employers can look at your credit report as well. Your credit report is not only updated regularly for your payment history but your location where you reside as well. And that can be a bummer. In other words, the collection agencies may be able to find you anywhere on the face of the earth.
Besides the lending institution you are applying for a loan, insurance companies also need your credit history to determine your insurance risks.
In a Nutshell
Getting your credit report often, reviewing it and fixing it for negative information will improve your credit history. Your credit score will thereby start increasing. So go ahead and get your free annual credit report now.