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:
 Washington Times | US Consumer Credit Increases $14.3 Billion in June (Update2) Bloomberg - Consumer credit rose by $14.3 billion, the most since November, to $2.59 trillion, the Federal Reserve said today in Washington. In May, credit rose by $8.1 ... US June consumer credit rises by $14.3 bln, 6.7 pct annual growth rate Consumers jack up borrowing in June Ahead of the Bell: Consumer Credit |
 Voice of America | US Government charges 11 in massive credit card fraud case Heise Online, Germany - The US government has charged 11 people with stealing tens of millions of credit and debit card details as part of an operation that targeted numerous ... Video: Feds Charge 11 in Massive Retail Hacking Case Credit cards: US authorities charge 11 in global identity theft racket Gang charged for theft of 41 million credit card numbers |
Credit Suisse Sued Over Auction-Rate Securities (Update3) Bloomberg - 7 (Bloomberg) -- Credit Suisse Group, Switzerland's second-biggest bank, was sued by Swiss semiconductor company STMicroelectronics NV for allegedly placing ... STMicro sues Credit Suisse over auction-rate debt |
Consumer credit jumps at fastest rate in 7 months MarketWatch - Consumer credit, excluding mortgage debt, expanded at a 6.7% annual rate in June after rising at a 3.8% pace in May. It was the biggest increase since the ... Credit-card Companies Making It Harder To Say 'charge It' CreditCards.com: Weekly Credit Card Rate Report Reform credit card industry |
 Earthtimes (press release) | Consumer credit rose $14.33 bln in June Reuters - WASHINGTON (Reuters) - US consumer credit expanded at the fastest rate in seven months in June as Americans turned to credit cards and consumer loans to ... Consumer credit rose $14.33 billion in June |
BC-based Lake View Credit Union Selects Open Solutions' Core Platform MarketWatch - Lake View Credit Union has assets of more than $200CDN million and serves 15500 members through three branches. This year, the credit union celebrated its ... |
Bridge Finance Group Provides a $4.0 Million Revolving Line of ... MarketWatch - CHICAGO, Aug 07, 2008 /PRNewswire via COMTEX/ -- Bridge Finance Group announced the completion of a revolving line of credit to Access Distribution, ... |
Regulators orders CNG to credit customers Hartford Courant, United States - Commissioners of the state Department of Public Utility Control voted unanimously to require the utility to keep the credits in place on customers' monthly ... Conn. regulators may order CNG to credit customers Regulators orders CNG to credit customers Regulators may order CNG to credit customers |
Many happy returns, credit crunch New Statesman, UK - Historically, credit crunches have been short-term events, temporary blockages in financial markets that, with a little care and attention from the central ... Credit crunch: Around the world The butterfly effect: How a blip became a credit crunch Credit crisis - how it all began |
Here comes the credit crackdown Independent, UK - One year into the credit crisis, regulators are hard at work on new laws they hope will prevent history repeating itself. Leading investment banks fear a ... |
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