a Good Credit Record
A solid credit history
can be one of your most useful and powerful financial assets. A record
of prudent credit use and prompt payments can enable you to not only qualify
for credit when you need it, but it may also enable you to get a lower
interest rate on your borrowing.
There are three main
credit agencies that gather financial information on individuals and then
make that information available to lenders to help them determine whether
to make a loan to someone. The information they compile includes a great
deal of basic data such as age, Social Security number, current and previous
addresses, employers and marital status. They also get information on
your borrowing history from places you have borrowed such as credit cards
issuers, mortgage lenders and others. Your credit report probably includes
all the credit relationships you have, date established, maximum allowed
credit, current balances and payment history.
Indications of a solid
- Some, but not extensive
- Prompt payment
of monthly bills.
- Paying down balances
- Steady employment.
Items that can hurt
your credit report:
- Filing for bankruptcy.
- Too many credit
- Too many applications
- Late payments.
- Increasing credit
- Several credit
cards with balances close to their limits.
Lenders will use a
credit report, along with evaluating your capacity to repay, your character
and any collateral in making decisions to lend you money. Many lenders
also take these same issues into account in deciding what interest rate
to charge or type of loan to offer.
It is important to
make sure your credit report is accurate and up to date. A program enables
you to receive a free credit report once a year. You can get this free
report by using the website - www.annualcreditreport.com. You can also
get copies by calling the credit agencies, but there may be a small charge
unless you have recently been denied credit.
- TransUnion - 800/888-4213
- Experian - 888/397-3742
- Equifax - 800/997-2493
If you see an error
on the report, be sure to contact the credit agency in writing. Tell them
of the error and ask that it be corrected. Negative information generally
remains in your credit report for seven years and bankruptcies may remain
for 10 years. However, most lenders pay particular attention to your most
recent couple of years of activity.
Being aware of your
credit report, making sure it is accurate, working to improve your credit
characteristics and understanding the importance of your report can all
help you ensure that credit will be there when you need it.