Credit Report and Score
You must never take your credit report and score for granted. These
are important tools for a successful loan application. The majority
of people are not familiar with the terms and the implications they have on their
finances. Here is a brief explanation of these terms.
Every payment or non-payment you make with your loans is recorded in
your credit report, whether they are happening at present or at some time in the
past. From the information available this record is then summarized into a three-figure value called your credit score.
Experian, Equifax, and Trans Union are the three major bureaus responsible
for the computation of your credit score. They divide your financial information
into categories and assign a value to each. Your payment history is assigned 35
percent of the score. Another 30 percent makes up for your outstanding debt.
15 percent of your total credit score is allocated to the length of time you have had your debts. While 10 percent goes to the loans you currently owe.
And the final 10 percent of your credit score is allocated to the number of
inquiries you make that constitutes. This category is the one that many people
are unaware of.
The inquiries you make actually affect you credit report and score.
Basically this means that for every time you get a loan rejected it affects your
credit report and score; which in turn leads me to one important point. Never
be in hurry to apply for a new loan. Make sure you have done all the necessary
preparations first. You need to get a copy of your credit report and
score so you get a picture of how it is faring and where it needs improvements.
If you find that you have a bad credit report and score, give yourself time
to do the necessary improvements first. Your credit report and score will change
with every action you make.
You can get a copy of your credit report and score by going directly
to either one of the three major bureaus (Equifax, Experian and Trans Union) that
are responsible for the computation of your credit score. Be aware that
they will charge you for the services that they provide. If you wish to obtain
a free credit report and score copy you should log on to the Internet and you
will find several sites willing to offer just that
Basically, how you have dealt with all your finances before and how
you are dealing with them now reflects in your credit report and score. This
will in turn determine whether you get the loan you are applying for or not.
Consequently, it also determines whether you get that new house, that
new car, or the holiday you have been planning for.
