Tuesday, 6 December 2011

Things to Know About Credit Reports

Everyone knows how important their credit score is, but some people aren't even sure how to get credit. Your score is used to qualify for home loans, car loans, and buying things like furniture and some electronics as well. So, for those who are just starting to build their credit, or want to start over to establish good credit, here are some things that may help you out.

Something everyone should know to do, even if you have a well established credit score, good or bad, is to know how to get your FICO credit score. There are many options available online for people to check their score, or to get updates on it. However, some of these, even though they advertise that they are free, may make you pay a subscription fee to their services. Everyone needs to know that every US citizen is entitled to view their credit report from all three companies, Equifax, Transunion, and Experian, every 12 months for free. If you decide you do want to pay to get your score more often, that is up to you, but you are allowed a free credit report annually.

Once you have gotten your current credit report, you need to keep building on that credit, and in a good way. Lenders will look at your report to see how reliable you are with making the correct payments and will you make those payments on time or not. For those whose credit score is low, lenders may see you as a risk that they may not get their money back from you. Lenders will also look at your bank accounts, employment history, and residence history. The reason they look at these things is to determine if you can live within your means, can hold a job for at least a year, and don't move around too much.

What you need to do to make sure you have the correct type of credit, is look at what your lines of credit are. Most lenders like to see at least three lines of credit that have been open for about 12 months. These lines of credit can be credit cards, utility bills, rent or house payments, or car payments. Some lenders will also look at nontraditional lines of credit if you do not have credit lines that have been around for 12 months. These nontraditional lines may be a cell phone bill, or a gym membership.

Remember to make payments on time, and pay the correct amount that you are billed for to help prevent receiving a bad credit score. Before applying for loans, or even jobs, be sure to check out your credit report for any mistakes. Doing this helps ensure that the lender will receive your most current credit score.

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