How Important Is It To Understand Your Personal Credit Report?

You probably know all too well that the information in your personal credit report is used by the credit card and finance companies when deciding whether or not to extend credit to you, but do you know just what information your credit report contains? For instance, did you know that the details that are contained in your credit report could affect whether or not you can buy that new home or will need to continue to live in your current 'shoebox'?

A lot ofIn a lot of cases people think that when a credit card company or other lender looks at your credit report they are simply looking at your credit score and, while this is unquestionably one of the things that they do look at, they are in fact looking at far more. Above all, lenders are looking at how much debt you have compared to your income and even fairly small accounts, such as those with a mail order company, will be considered as an income deduction when it comes to considering an application for a loan.

If a credit card company, bank or other lender sees that you have got less money coming in than you have going out then your loan request will automatically be turned down. Indeed, by law a certain percentage of your income has got to be available to meet the payments on a loan before the lender can approve it, whatever the purpose of the loan.

Lenders will also be looking at your credit history over the last seven years to see how well you have managed loans in existence during that period. Specifically, they are looking to see if you have made payments on time and will play close attention to any payments that were more than thirty days late. It might not have appeared particularly important to you at the time that you got into difficulty and were late with your payments for a few months on one of your accounts, but any new lender will certainly take this into account when assessing the risk of lending to you now.

A lender is also going to see if any of your accounts have run into debt during the last seven years and whether these debts have now been cleared. If you have outstanding payments on an existing loan agreement credit card companies and other lenders will be very wary when it comes to extending you further credit before these are cleared.

Finally, your credit report will show if you have filed for bankruptcy, usually in the last ten years. Some people think that a company is much more likely to lend to you if you have filed for bankruptcy as they enjoy the protection of knowing that you are not permitted to file again for several years. This however is not the case and filing for personal bankruptcy is seen as a red warning flag by the credit card and finance companies indicating that you have already shown a tendency to get yourself in over your head when it comes to handling your money.

Your credit report is a very important document that you ought not only to understand but which you ought to review from time to time for your own protection. Happily, the law requires that you be sent a copy of your credit report once every year if you request it and so the first thing which yu need to acquaint yourself with is how to obtain your free annual credit report. Having obtained your report you then need to look through it with care to make sure that it is accurate and then to ask for it to be changed if it is not. Also, there are certain instances in which you can request alterations to your personal credit report, even if it is correct, and here you will have to have the answers to hand for such questions as how can I remove a judgment from my credit report?