Our society is credit driven and almost every aspect in the financial world is based on a borrower’s credit score and credit report. You whole financial history is on your credit report. Credit reports contain public records such as judgments, bankruptcies, foreclosures, and tax liens. Credit reports also contain personal private information such as your social security number, date of birth, work history, residential history, payment history, active credit accounts, closed credit accounts, collection accounts, and credit inquiries.
Basics On Credit Reports
A person’s credit report is the collection of all data of the person’s credit and public information. There are three major credit reporting agencies; Transunion, Equifax, and Experian. A person credit reports is what creditors and businesses use as a reference for a person’s or borrower’s financial creditworthiness and how reliable they are in considering granting them credit. Credit reports contains information on who your creditors are, how much you owe your creditors, what your credit limit is, your payment history, and public records such as bankruptcies, judgments, tax liens, etc.
Any creditor that considers you for credit will need access to your credit report and use credit reports as a main factor in whether you are credit worthy or not. Whether you are applying for an apartment, applying for a credit card, automobile loan, mortgage, or other forms of credit, the creditor will most likely pull credit reports in determining whether to grant you credit or not.
Credit Is A Necessity
Having good credit is extremely important. Even though you might not need a loan or credit card, if you have bad credit, you will pay a higher price than others for insurance and other non credit related situations. For example, if you have bad credit or no credit and want to rent an apartment, the chances are that you will need to put an extra month of security deposit or the apartment complex might deny your apartment application altogeher. If you want to order new electric, gas, water, or telephone service, the chances are that the utility company will require you to place a hefty security deposit if you have bad or little credit. For those with great credit, the utility company will not require a security deposit.
People with bad credit pay much more in insurance premiums. Sometimes insurance premiums can be double the premium for those with bad credit than those with great credit.
To qualify for a stellar mortgage rate on a conventional loan, many mortgage lenders require credit scores over 740 FICO.
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