How Well Do Your Understand Your Personal Credit Report?

You almost certainly know only too well that the information which is contained in your personal credit report is used by the finance and credit card companies when considering whether or not to extend you credit, but do you know what is actually in your credit report? For example, did you know that the information which are contained in your personal credit report could affect whether or not you are able to purchase a new house or will have to stay in your present 'shoebox'?

In many cases people think that when a credit card company or other lender looks at your credit report that company is merely looking at your credit score and, although this is definitely one of the things that they do look at, they are looking at a great deal more. In particular, lenders are looking to see the amount of debt you have compared to your income and even quite small accounts, like those with a mail order catalogue company, will be treated as a deduction from your income when considering a loan application.

If a lender comes to the conclusion that you have got more money going out than you have coming in then your loan application will certainly be reject. In fact, the law requires that a specified percentage of your income must be available to meet the payments on a loan before the lender is allowed to 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 handled any loans during that period. In particular, they are looking to see if you have made payments on time and will play close attention to any payments which you made more than thirty days late. It might not have appeared especially important to you when you got into difficulty and were late with your payments for a few months on one of your accounts, but any lender will certainly take this into account when determining the risk of lending to you now.

A lender will also look to see whether any of your accounts have run into debt over the last seven years and whether these debts have now been paid. If you have payments outstanding on an existing agreement credit card companies and other lenders will be very wary about giving you additional credit before these are paid off.

Finally, your personal credit report will also show whether you have filed for bankruptcy, usually within the previous ten years. A few people think that a company is far more likely to advance you credit if you have filed for bankruptcy because they have the added protection of knowing that you are not able to file again for several years. However, this is not true and filing for personal bankruptcy is seen by lenders as a warning flag showing that you have already demonstrated a tendency to get yourself in over your head when handling your finances.

Your personal credit report is an extremely important document and one which you ought not only to understand but that you ought to review occasionally for your own protection and peace of mind. Fortunately, the law requires that you be given a copy of your personal credit report once each year on request and so the first thing which yu should acquaint yourself with is how to obtain your free annual credit report. Having obtained your report you then need to look through it carefully to ensure that it is accurate and then to ask for it to be amended if it is not. Furthermore, there are some circumstances in which it is possible to ask for alterations to your 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?