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How Your Credit Rating Affects You, and How to Check It
You might not know it, but every time you take out any kind of
loan or credit or pay something back, it gets counted on your
credit rating. Who keeps a record on you will vary according to
where you live, but the big three credit reference agencies are
Experian, Equifax and Trans Union. They will provide your credit
rating to any company that is thinking of lending you money.
What is Included in Your Credit Rating.
All the debts you currently have are included in your credit
rating. There is a history of all the debts you've had in the
past ten years or so, and special emphasis is put on anything
that has gone wrong. Defaulting (never paying) on any debt will
ruin your credit rating completely. Borrowing a lot before you
start paying anything back will make you look like a very bad
risk, and so will going all the way up to (or even over) your
limit on a credit card.
It is also worth considering that the credit reports of anyone
you live with may be linked to your report, and could reflect
badly on you - your wife or husband's credit rating is tied to
yours quite closely.
How Your Credit Rating is Worked Out.
The most common method of coming up with your rating is called
'FICO', named after the Fair Isaac Corporation, who invented it.
Your current credit status is prioritised, in this order: whether
you've paid past debts, how much debt you currently have, your
credit history, the types of debt you use, and how many times
your rating has been checked recently. Things that happened more
recently are given more weight than things that happened a long
time ago.
Why Your Credit Rating is Important.
Any time you get turned down for a credit card or any other
loan, the chances are that it was because of your credit rating.
Companies giving out small loans are far more likely to rely
completely on this rating than to bother checking your income,
and a worse rating will mean that you are offered a higher
interest rate.
Your rating is important when you get car loans and mortgages
too. You don't want to find a house you love only to get turned
down for the mortgage thanks to your habit of paying your credit
card bills late.
How to Check Your Credit Rating.
Credit reference agencies can't hold your information on file
without telling you what it is they have. If you write them a
letter and pay a very small fee, they have to send you the full
credit report that they have about you.
You can then check over your credit rating, and send a letter
back to the agency telling them about anything that you think
isn't right. You might find that a screw-up has made you look bad
when it wasn't your fault. They will include anything you send in
your file.
In some countries, you may find that you can sign up to get
credit reports regularly for a small fee, or even for free! Make
sure to check your local laws.
Ken Austin is the webmaster at Debt Consolidation
Solutions and Credit Relief
Solutions
MORE RESOURCES:
Clock ticks down on credit bureau class-action dealIndianapolis Star, United States - 39 minutes agoIn a class-action settlement, credit bureau TransUnion has agreed to provide free credit- monitoring services to millions of consumers to settle claims it ... |
MORE COLLEGE CREDITChicago Sun-Times, United States - 10 hours agoDespite the current nationwide credit crunch, the State of Illinois secured $100 million for the student loans by tapping a new source -- credit unions. ... |
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