Everyone Has A Credit Report

Category: Finance, Credit.

We hear so much about improving and repairing your credit score, but why?

How do they affect our financial decisions and lives? Why are credit scores such a big deal? These are questions that everyone should know the answer to. Everyone has a credit report. It is important to understand how credit scores work to understand how you can qualify for your next loan. This report is put together with information regarding your finances. It also shows the bills you pay, and how you pay them.

It shows all of the accounts you use and how well you manage your money. This means that your credit report will show every late payment you have ever made. Your credit record isn t the only thing that comes from your credit history. It entails all of your credit history, from your first savings account to the most recent car payment you made. Your credit score, or that three digit number, is derived from your credit history as well. Most people realize that buying things now and paying for them later is a privilege.

This number, ranging from 350 to 800, also shows how well you manage loaned money. Even the smallest credit card charge is considered a loan. Your small repayment plans will show bigger lenders how well you can handle borrowed money. Your credit card company is loaning you money now, and expects to be paid at a later date. Let s say you are applying for a mortgage loan. This does not register well with lenders. You already have a car loan and you are pretty good about making your payments, just sometimes they are late and once you totally forgot until they sent you a notice.

If they are going to loan you money for your future home they want to be sure that you are going to make the payments every month and pay them on time as well. Be aware that your credit score not only affects you borrowing power, but your interest rate as well. Your credit score or rating is one of the most important factors to qualifying for a loan, along with your income and your debt to income ratio. You see all of those low interest rate credit cards and mortgage loan rates, but you have to remember that those are reserved for those with the best credit rating. Though your rate could only be a few points above the best rate, you could pay a lot more in interest over the next 15 or 30 years of you mortgage loan. In most situations, the better your credit, the better your interest rate.

If you are looking to increase your credit score to help you qualify for that upcoming loan, here are a few tips to help you along your way. The second tip is, if you can afford to, pay more than just the minimum payment on credit cards, and personal loans, car loans. The first is to always make your payments and pay your bills on time.