You almost certainly know all too well that the information in your personal credit report is used by the credit card and loan companies when determining whether to extend you credit, but are you aware of what information your personal credit report contains? Did you know for example that the details that are contained in your credit report could influence whether or not you are able to buy a new home or will need to stay in your current 'shoebox'?
In a lot of cases people believe that when a company looks at your credit report that company is merely looking at your credit score and, while this is certainly one of the things that they do look at, they are looking at far more. In particular, lenders are looking to see how much debt you have in comparison to to your income and even relatively small accounts, such as those with a mail order catalog company, will be considered as a deduction from your income when considering a request for a loan.
If a credit card company, bank or other lender determines that you have got more money going out than you have coming in then your request will automatically be turned down. Actually, by law a specified percentage of your income has got to be available to meet loan payments before the lender is allowed to approve it, whatever the purpose of the loan.
Lenders will also be looking back at your credit history over the past seven years to see how you have handled loans in existence during that period. Specifically, they are looking at whether you have made payments on time and will take note of any payments that were more than thirty days late. It may not have appeared particularly important to you at the time that you ran into a few problems and were late with your payments for several months on one of your accounts, however a lender will certainly consider this when assessing the risk of lending to you now.
Lenders will also see if any of your accounts have run into debt during the past seven years and whetherthese debts have now been paid. If you have payments outstanding on an existing loan agreement lenders will be very wary when it comes to giving you further credit until these are cleared.
Finally, your personal credit report will show whether you have filed for bankruptcy, usually in the previous ten years. Some people believe that a company is far more likely to advance you credit if you have filed for bankruptcy as they enjoy the protection of knowing that you are not able to file again for a number of years. This however is not the case and filing for personal bankruptcy is viewed by lenders as a red warning flag showing that you have already demonstrated a tendency for getting yourself in over your head when it comes to managing your finances.
Your personal credit report is a very important document and one which you ought not only to understand but that you should review from time to time for your own protection. Happily, the law requires that you be given a copy of your personal credit report once each year if you ask for it.
Source: http://www.ArticlePros.com/author.php?Donald Saunders
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