The information on your credit report can be used to determine whether or not
you are able to buy a new car, rent an apartment, get a loan, or qualify for
other credit. By monitoring your personal credit report, you'll stay informed
about your current credit status. You'll know which businesses and credit
grantors have requested to view your credit report, which new accounts have
been activated in your name, and whether or not derogatory information has been
added.
Checking your credit also allows you to be alerted to information that may have
negative, long-term effects on your credit history-such as excessive inquires
and possible fraud.
By checking your credit report, you can discover possible inaccuracies in your
credit history. Correcting inaccuracies ensures that your credit report is
current and correct, which in turn helps speed the processing of your credit
requests.
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Many financial experts agree that you should check your credit report at least
once a month. Creditors generally send updates to the credit bureaus once every
month. Therefore, your account information should be updated once a month as
well. If you are expecting an important change in one or more of your accounts,
or if you are closely monitoring your credit history, you may want to check
your credit report more often.
All creditors do not send updates to the bureaus on the same day. The credit
bureaus are constantly receiving updates. There is no easy way to tell exactly
when a creditor will send new information to the bureaus, or when the bureaus
will update their databases. However, it is common for the same creditor to
update records on the same day of each month. Thus, it is beneficial to choose
the same day each month to check your credit report.
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A credit bureau, or credit repository, is an entity that gathers information
about consumers' credit histories. Your credit history includes information
concerning your identity, your payment habits, and your public record. Credit
bureaus sell credit reports to credit grantors, such as banks, finance
companies, and retailers. Credit grantors use credit reports to determine
whether or not a potential borrower is creditworthy.
There are three major credit bureaus in the United States: Experian, Equifax,
and TransUnion. These three bureaus provide nationwide coverage of consumer
credit information.
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Credit bureaus obtain identification and credit information from credit
grantors, such as banks, retailers, and collection agencies. Bureaus obtain
monetary-related public record information directly from the court systems.
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The credit bureaus keep your personal credit history for a period of
approximately ten years.
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Closed or Inactive Accounts - 10 years from the date of last activity.
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Derogatory Accounts - 7 years from the date of original delinquency.
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Public Records - 7 years from the date of payment or indefinitely if the Public
Record is an unpaid tax lien.
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Chapter 7 Bankruptcies - 10 years from date filed.
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Credit fraud is a growing problem, and it affects each and every one of us.
When a credit card thief purchases goods with a stolen card, it is the creditor
that has to cover that cost. Creditors cover this loss by charging cardholders
higher interest rates.
Credit card fraud goes beyond the use of a stolen credit card. A thief can use
your account numbers even when your credit cards are safely in your wallet. You
may not realize that fraudulent charges are being racked up on your card until
you notice charges, that you did not make, on your monthly statement.
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By observing the following guidelines, you can influence your creditworthiness
for the better:
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Pay your bills on time.
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Check your credit report regularly and dispute inaccuracies.
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Watch your debt.
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Watch your available credit.
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Avoid excessive inquiries.
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A credit score is a sum used by lenders as an indicator of how likely you are
to repay your loans. Your credit score is generated by a mathematical formula
utilizing the data from your credit report. Lenders have been using credit
scores as part of the lending decision for more than 30 years.
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Various factors determine your credit score, including the following:
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Payment History
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Outstanding debt
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Length of credit history
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Severity and frequency of derogatory credit information such as bankruptcies,
charge-offs, and collections
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The amount of credit used compared to the credit available
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Your credit score is an important indicator of your financial health. Lenders
use your credit score to determine:
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Whether or not you are a good candidate for a loan
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What type of interest rate you will pay.
While your credit score is a key determinant of your creditworthiness, lenders
also examine the information on your credit report and your loan application.
Regularly checking your credit report enables you to:
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Be informed of the most up-to-date information in your credit history
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Correct any inaccuracies, to make sure that your credit data is a true
depiction of your credit record and increasing your chances of receiving credit
under the best possible terms
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There are several types of credit scores available. Typically, the higher the
score, the better. Each lender decides what credit score range it considers to
be a good credit risk or a poor credit risk. For this reason, the lender is the
best source to explain what your credit score means in relation to the final
credit decision. After all, they determine the criteria used to extend credit.
The credit score is only one component of information evaluated by lenders.
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These common guidelines and practices will generally help raise your credit
score:
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Be Punctual
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Pay all of your bills on time. Lateness, collections, and bankruptcies have the
greatest negative impact on your credit score.
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Check your credit report regularly and take the necessary steps to dispute
inaccuracies.
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Don't let your credit health suffer due to inaccurate information.
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Watch your debt.
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Keep your account balances below 75% of your available credit. For instance, if
you have a credit card with a $1,000 limit, you should try to keep the balance
owed below $750.
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Avoid "quick" credit fixes
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A good credit score is created over time and reflects a number of interrelated
factors.
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Avoid excessive inquiries.
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A large number of inquiries occurred over a short period of time may be
interpreted as a sign that you are:
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Opening numerous credit accounts due to financial difficulties.
- Overextending
yourself by taking on more debt than you can actually repay.
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