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Monday, 11 September 2006
Why Check Your Credit?
In order to maintain a good credit rating, you need to make sure you monitor your credit report. The Fair Credit Reporting Act (FCRA), entitles you to know why a loan or other type of credit is declined. In addition to citing the specific factors cause that lead to your credit decline, contact information is provided so you know which credit reporting agency originally provided the credit report. From there, it is up to you to dispute false claims that may have lead to the decline of your loan application.
Credit report details everything located in your credit file - every credit-related activity including your credit limits and balances, payment history and any judgments made on your credit status, such as foreclosures and bankruptcies. By monitoring your credit history, you have an opportunity to learn from past mistakes and to improve upon how you manage your finances, today.
The FCRA is the governing body over access and liability issues in reference to credit reports. According to the FCRA, access to your credit history is allowed to anyone with "permissible reason". When a consumer applies for a loan or other type of credit, this signifies "permissible reason" and the lender is given full access to your credit status. As certain inquiries may adversely affect your credit rating, this law protects you from any unnecessary credit proceedings.
With such limitations on public access to your credit report, written approval may be necessary in order to provide certain individuals with admission to your credit information. Prospective employers or landlords may want to check your background for potential risks inherent in offering employment or residence. Under such circumstance, your exclusive and written permission is required.
When should you check your credit?*
If you are about to apply for a major loan, such as a house or car, it's important to give yourself time to correct mistakes or make good on delinquent accounts. Depending on the type of loan, you should give your self enough time. Here's a guideline:
- For a home, you should check your credit at least three to six months before you apply for a mortgage.
- For an auto loan, check your credit (and arrange financing with your bank or credit union) before you start shopping.
- For credit cards, check your report before you apply. The last thing you need is for a credit report problem to slow down your application -- particularly if it's not your fault.
Once you get the report, you should make sure the following information is correct:
- Your name, or names if you are or were married
- Social security number
- Date of birth
- Addresses of places you've lived
- Names of places you've worked
- Pending accounts and accounts that have been closed
- Nothing has been on the report longer than is allowed by law:
-- Bankruptcies must be taken off your credit history after 10 years.-- Suits and judgments, tax liens, arrest records, and most other kinds of unfavorable information must be dropped after seven years.
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Records of delinquent payments or other problems (i.e., make sure they aren't mistakes)