Understanding How Your Credit Report Affects Your Life
Posted on December 15th, 2010
Although many people understand that the information on their credit report can affect their ability to obtain credit, they fail to realize that their credit report can affect their lives in many other ways as well. Because of this misconception, hundreds of thousands of individuals do not give monitoring their credit report the level of importance they should and neglect to review the information on a regular basis for accuracy. Over the past decade, a credit report has become one of the most important pieces of financial information available to an individual and the number of areas of your life that can be affected by the information contained in your credit report have increased significantly.
Information Contained In A Credit Report
The information that is included in your credit report is the information that creditors use to make a determination about your ability and willingness to repay your debts. This information includes any open credit accounts, the payment history for the accounts, whether the accounts are current or delinquent, and the amount of time that the accounts have been open. Delinquent accounts and missed payments are reflected on the credit report for a period of 7 to 10 years, depending on the type of account.
The information included in your credit report is used to calculate your credit score, a three-digit number that provides an instant look at your creditworthiness. Every piece of negative information reported to your credit report will cause a reduction in your credit score while steady payments and a long account history will result in an increase in your credit score. Keeping your credit score as high as possible is important for being able to obtain credit at a reasonable interest rate.
How Can This Affect My Life?
Negative information in your credit report can affect a number of different areas of your life by causing a reduction in your credit score and painting a picture of irresponsibility for future creditors. Rental companies for apartments and town homes often look at the credit reports of their applicants to make a determination of whether they can depend on the person to pay their rent on time. Car dealerships can deny car loans or increase the interest rate charged for the loan based on a person’s credit history.
Having a great deal of negative information on your credit report can even disqualify you for an employment position if the employer determines that you would be too much of a risk in a position of trust. The information in a person’s credit report is a reflection of their financial stability and can affect many significant areas of your life.
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Tags: Credit Report, Report
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