The Significance Of Credit Reports

Chances are very good that you are one of the millions who have seen the commercials with the cute guy singing about his bad credit. Each new commercial talks about a separate motivation for why he should have been checking his credit history, but are credit reports actually that significant?

A credit report is just about the first thing that a bank or similar moneylender checks when you request a mortgage. If you have bad or even average credit you may be rejected. The poorer your score actually is, the greater the probability that you will not be capable of getting the money you require. In the same way, a number of landlords use a credit report to establish whether individuals are qualified to rent an apartment, home, or duplex. A better score often grants you a lower interest rate, and, consequently, a lower monthly premium.

Buying a new or used car is no different in this regard. Your credit report will determine whether you qualify for a loan for a vehicle as well. Although the loan is much smaller than for a home loan, credit still positively or negatively affects your ability to borrow money. A bank will not loan money to someone with a very low credit score, often even if they have a sufficient amount of collateral to back the loan.

Although you do not need money to get a good job in most cases, your credit can still keep you from getting a job with large companies that offer higher starting pay. These companies use your credit in much the same way that banks do, to check your trustworthiness and responsibility. A low credit score is often a huge turn-off for companies that pay the most money.

You may be wondering what is on your credit report that affects your ability to borrow money or be trusted in a good job. It seems too simple to believe that small financial decisions we have made, such as the decision to pay (or not) on time, can prove how reliable and trustworthy we are, but that is exactly what a credit report says. They report what type of loans you have had in the past, how faithful you have been on different types of unsecured (and some secured) payments, and similar data.

Your credit tells people about how responsible you are with your money, because they show how much debt you have outstanding, whether you make payments on that debt in a timely manner, and how consistently you pay things off when you are supposed to. Charged off accounts, past due balances, and similar items will create a poor score. Paying on time, especially on a couple of revolving accounts or bank loans, can boost your credit score and increase the likelihood that you will get the financial backing you need when you need it.

If you are planning to buy or rent a house, purchase a new or used car, or even start hunting for a new job, you may first want to consider getting a copy of your credit report. They are very easy to find, and many websites offer one free report per year. This free report covers all three major reporting companies, and will give an individual score from each company. These details can give you the security you need when you head into a lender or hiring company, or save you some embarrassment.

We have all seen the line of commercials with the guy singing about his credit. Each discusses a different reason why he should have avoided a bad credit record, but are credit reports and credit repair so important?

Related Blogs

• Related Blogs on Finance
• Club Thrive Dallas

Tagged with: bad credit • credit repair • credit report • credit score • Finance • money

Filed under: Finance

Like this post? Subscribe to my RSS feed and get loads more!