Credit Reports: What You Should Know About Yours
When you set out to obtain credit approval, you will find that creditors generally have some minimum requirements that their applicants must meet. For example, they may look for a minimum annual income or reject anyone who has been through bankruptcy in the past. The following factors are closely related to your credit rating and your success in obtaining a loan.
Residence
You may be given a higher score if you have lived at the same address for two years or more. (Since this is the case, do not use a post office box when you are applying for credit.) In addition, home owners usually receive a higher credit rating than those who rent.
Age
If a lender’s records show that those in a particular age group have a better bill-paying history than people in other age brackets, the law allows that lender to assign a higher credit score to the age group with the best payment record, and seniors are protected by the Equal Credit Opportunity Act.
Credit Cards
Your possession of a bank card (Discover, Visa or MasterCard) that has been paid promptly over a certain period of time will improve your credit score because you met the banks standards when you applied for that card. Possession of a checking and savings account will also work in your favor here. On the other hand, charge-off accounts (written off by the creditor in the past as being uncollectible) and accounts that have been turned over to a collection agency will have a very negative impact on your credit rating.
Self-employment
If you have difficulty in obtaining credit because you are self-employed, try contacting the potential lender ahead of time, and find out what other information they might need for processing your application.
Child Support
Delinquencies in child support often appear on credit reports, and the Child Support Enforcement agency must contact you if it intends to make such a report and inform you as to how you can dispute the claim.
Credit Limit
Remember that being at or near your credit limit, or having too many open accounts, can lower your credit rating.
Fair Credit Reporting Act
As a consumer, the Fair Credit Reporting Act gives you the right to dispute any item in your credit file that you feel is incomplete or inaccurate. To maintain your credit rating, if a “closed” account is listed as being “open,” dispute that entry with the credit bureau in question by sending a certified letter to them. To avoid this problem, whenever you close an account, ask that creditor to list it as “closed by consumer” in their records.
Co-signing a Loan
If you co-sign a loan for someone (which should be avoided), and that person fails to make the necessary payments, guard your credit rating by making the payments yourself and having the co-signer reimburse you directly each month.
New Credit Cards
To avoid finding the “too many inquiries” designation on your credit report, just apply for the credit that you really want, and wait to hear the status of each application before going on to the next one.
Late Payments
Any current late payments - within the past six months to a year - are extremely damaging to your credit rating. Be aware of all due dates and make your payments in a timely fashion, even if you can only send the minimum amount due to the lender.