Your Credit Rating And You

Credit ratings at their most basic are personal debt histories.  Credit ratings follow us our entire lives, providing a glaringly straight picture of our financial behavior.  Lenders and credit card companies look to credit ratings for the most accurate assessment of whether we are good risks or bad risks.  But just precisely what kind of information do credit ratings contain?

 

For starters, credit ratings contain all the vital personal information you would expect them to have, such as full name, address and social security number.  Any debt you owe will be added to your credit report.  Credit ratings contain every store credit card you carry, their maximum limit and how close you are to reaching that limit. Payment history is included as well.   A clean credit report will show no late payments, few applications for new credit or loans and low balances on existing credit cards.  Good credit ratings win “Yeses!” and lower interest rates with banks and credit card companies.

 

Negative comments, past foreclosures and bankruptcies obviously do not look good on credit ratings.  Credit ratings carry negative information for a long time.  Late payments, for instance, remain on your credit rating for seven years.  Bankruptcies can stay on for ten years.  Frequent loan and credit applications are also damaging.  It pays to keep a good financial profile. You can help yourself by checking your credit report annually.  Credit ratings sometimes contain information that is out of date, such as your maiden name instead of your married name or an old address. Negative errors can occur, too.   These need to be found well before you apply for credit or loans.  Credit ratings can take weeks, even months, to correct.

 

In high school, kids joke about what goes on their permanent record.  Credit ratings are permanent records that are no laughing matter.  You should make it a point to know what is in your credit ratings.

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