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Why Is Your Credit Report Important?

Why Is Your Credit Report Important?

There are tools available to financial companies as they determine what types of reports are necessary to demonstrate the capabilities of individuals as they manage or fail to manager their: bank account, credit cards, mortgages, personal loans, and in some instances mobile phones. This information is important to help show lenders the credit profile of all the customers they do business with. Anytime a payment is missed or delayed it will be recorded in your credit history for an extensive amount of time. Companies use this information to determine whether or not to lend to you therefore it is vital to take control of your credit.

The status of your payment history, whether monthly payments are on time or not, or if you have missed any payments, determines your credit profile. Maxing out credit cards is never a good idea and will negatively impact a credit card score. Notations of delinquent actions can remain up to ten years on your credit card report and may deter lenders from extending you the use of their money. It is a terrible idea to file for bankruptcy as it demonstrates an inability to plan for long-term money issues. Again, it can stay on your report for up to ten years. Avoid tax liens, as well, as they are a permanent mark on your credit report.

The total amount of outstanding debts incurred are also considered by a potential lender when asking for use of someone’s money. In addition, what the overall status of all credit cards, how many credit cards you have, and where the money is coming in to pay off the incurred debt. The highest credit score a person can attain is 850. It is best to strive for the highest credit card score as banks and lenders are more likely to lend money with smaller interest rates and fees.

The Fair Credit Reporting Act stipulates that all firms need to notify customers when they take “adverse action”; raising rates is considered an adverse action. Due to these notifications customers can take action and report or contest inaccuracies that may impact their overall score. A ruling will help shed light on the circumstances under which insurance companies reveal to customers the implications of a bad credit score, e.g. bad credit affecting the cost of insurance. In one case the Supreme court ruled that a it is necessary for the FCRA to have a stricter code. The ruling freed insurers against the risk of class-action lawsuits should they fail to send required notices to customers.

A statistical analysis revealed that payment history derived using credit files, ranging from 300 to 900 scores, is derived in a credit card report. You are allowed one free credit card report, yearly. This allows the customers to check for errors that prove your position against the companies. You can send a letter to the credit-report agency about the error you may have found and after 30 days there should response. Lest there is no response a second letter is to be sent requesting an investigation of the error. Wait another 30 to 45 days if you provided additional information. Future employers, lenders, banks, and insurance companies all access your credit report to make a final decision. With the help of your yearly FICO score the level of risk is calculated to determine the money to be lent to you in the future. Maintaining a healthy credit score is vital.

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