Getting Your Credit Report and Understanding Whats On It
If you intend to apply for a loan, you need to obtain your credit score. Understanding what this score means will allow you to make the loan process easier and quicker. Let's face it; most people want the loan process to be as painless as possible. Obtaining and understanding your credit score will help you see potential problems and perhaps eliminate them before you begin the loan process.
There are three different Credit Bureaus from which you can obtain your credit score. These are Experian, Equifax and Trans Union. Each of these companies applies a different formula in figuring your credit rating, though these formulas are weighted so a score from one company is equivalent to the same number score from the others. Because these three firms coordinate their credit rating system through the Fair Isaac Company, the credit score is known as a FICO score. Particular loan companies might look at your salary or the stability of your current employment, but the FICO score usually provides a good understanding of a person's credit standing.
Your FICO score is based on your credit report, which is a combination of your current credit accounts and your long term credit history. The past two years is by far the most important part of your credit history. Usually, a bad spot on your credit record will disappear once the twenty-four month window has closes on it. Your credit rating can range anywhere from 375 to 900, but most scores are in the 600-700 range.
650 or more. This is considered the magic number, and if you score 650 or higher, then you have excellent credit. If your credit rating is 650 or above, acquiring loans should be relatively easy and your interest rates should be to your liking.
Between 620 and 650. This is where most people stand and means you will be able to obtain reasonable loans and rates of interest, though the process might be a little slower and you might have to answer a few more questions.
Below 620. This doesn't mean you cannot get a loan. But it does mean the loan process will be longer, less pleasant and with more strings attached. Understanding this fact about your credit score will help prepare you when obtaining a loan.
If you find a discrepancy in a credit report, you need to address your concern to the appropriate credit bureau. If you can give a reasonable explanation for the mistake or, better yet, if you can provide documentation to contradict the discrepancy, you can have your credit report changed. Usually, all three credit bureaus will not make the same mistake and your FICO score will be correct. I would suggest not inquiring about your credit score too often, because each inquiry goes on your credit record and the appearance of concern can affect your credit score.
Finally, remember that the number of the FICO score is not important in itself. Each creditor will have different credit rating cutoffs, so a firm understanding of your potential creditor's credit score guidelines will help you understand the real implications of your credit score.
You can read more about credit and debt issues at the Debt Consolidation Blog.
MORE RESOURCES:
 China Daily | US August consumer credit falls by $7.88 billion, first decline in ... Forbes, NY - WASHINGTON (Thomson Financial) - Americans unexpectedly decreased their credit borrowing for the first time in more than ten years, mostly cutting back on ... Video: Bernanke: More Economic Pain Ahead Stocks down despite government moves to free up credit Consumers Trim Their Borrowing |
Credit cards next in line for tightening Atlanta Journal Constitution, USA - By MARK GONGLOFF As consumers watch their wealth disappear in the markets, some are also at risk of losing one of their last spending lifelines: credit ... Fear gripping Wall Street Bailout should not include price controls on low-limit credit cards Fed's new arsenal firing blanks |
US consumer credit posts worst drop ever National Post, Canada - US consumer credit plummeted by US$7.9-billion dollars in August - its sharpest drop on record, US Federal Reserve figures showed Tuesday. ... US consumer credit declines for first time in over decade Consumer Credit Drops for First Time in 10 Years US Consumer Credit Dropped by the Most on Record (Update1) |
 Reuters | With Credit Drying Up, Car Buyers Bring Cash New York Times, United States - Tighter credit was a crucial factor in the stunning 26.6-percent drop in September vehicle sales in the United States. In September, sales fell below 1 ... Credit crunch hits auto market's weak link 700 US dealerships could close this year, says head of dealer group Auto dealers looking for the end of the credit crisis tunnel |
 Reuters | Former AIG CEOs back credit default swap regulation Reuters - N: Quote, Profile, Research, Stock Buzz) said they would back regulation of the credit default swaps market in testimony at the US House Oversight and ... Unregulated swaps hastened Wall Street collapse New York insurance regulator calls for regulation of credit ... Greenberg Says Federal Loan to AIG Is Bad Deal |
 Thanh Nien Daily | Libor for Overnight Dollar Loans Jumps as Credit Freeze Deepens Bloomberg - The seizure in global credit markets is deepening on speculation central bank attempts to revive lending between financial institutions won't work, ... Credit gears of commerce are still jammed Credit markets still tight as stocks plunge Credit fears threaten to clobber world economy |
 Boston Globe | Crude Oil Falls as Demand Slumps, Credit Market Turmoil Worsens Bloomberg - Global stock markets have plunged as banks freeze credit lines to investors and companies. ``Demand destruction is prevalent in developed countries with ... Canada energy stocks slump on credit woes, outlook Crude Oil Falls as Worsening Credit Crisis May Curb Fuel Demand |
Corporate America Credit Union and FIMAC Reach Agreement to Offer ... MarketWatch - Based in Birmingham, Alabama, CACU has over $1.4 billion in assets, and serves the financial needs of 174 member credit unions. ... |
 Voice of America | Small US Businesses Feel Pinch of Tightened Credit Voice of America - By Mike O'Sullivan As the US Federal Reserve System announced measures to ease the credit crisis Tuesday, small business owners around the United States say ... |
 New York Times | Federal solar tax credit extended San Antonio Business Journal, TX - The Solar Electric Power Association expects solar generation to expand significantly thanks to the extension of federal solar tax credits to utilities. ... Solar energy gets huge earmark in bailout bill Will Coal Be Cashing In On the New Tax Credit?  Comment by Gregory Wetstone AWEA Sr. Director of Governmental & Public Affairs |
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