Check Your Credit Report
As you start making more adult decisions in your life you will require adult-like funding. At one time or another. the funding you need will inevitably come from some sort of a bank loan and getting that bank loan will depend on having good credit. You figure, you have never had a problem, so you must have good credit? Or, you recognize you had a minor credit problem, but you have no idea what that means in terms of future credit opportunities.
There are a good many things that can affect your credit negatively, and only long periods of perfect behaviour, can things affect it positively. In order to help you build good credit, here are some things to avoid that can negatively affect your credit:
Missing Payments - This may seem obvious, but there are some issues that should be brought forward. The first fallacy is that paying late is the same as missing a payment. Most companies do not file a full credit strike against you until you have not paid for 90 days. This does not mean that you should be skipping payments, it simply means that you do not need to get into a frenzy if you pay a credit card bill a day or two late.
Having No Credit - The fact that you have never borrowed money does not help you. In order to be able to borrow money you need to have borrowed money. I know that this sounds like a catch 22, but you can avoid this problem. Get a credit card with a low limit and make a few purchases on it, make your payments in time, and build up a credit record.
Credit Seeking - Applying for lots of loans will hurt your credit. If you keep sending in credit card applications and they keep coming back declined then you can assume that it will become increasingly less likely that your application will be approved somewhere else. Stop trying and work on improving your credit. Also important to note is that when shopping around for mortgages they will want to get you pre-approved for everything. Do your best to not have them put in the application, simply get the rate, and then narrow it down to 2 or 3 and get pre-approved through them. Important to note is that if you are pre-approved through one mortgage vendor you will be approved through all of them.
Skipping Payments - Isn’t this the same as missing payments? No. Skipping a payment is when you could make the payment but decide not to for whatever reason. A common example is getting a bill for less than $1 and deciding that its not worth the effort to pay. This can still affect you as some of the automated systems will file a credit strike for any amount outstanding. If you think the bill is too small to pay, phone the company issuing the bill and let them know such, and have them waive the bill. If they don’t waive the bill, then pay it!
So with these easy pitfalls out there, how do you know if you have bad credit? Check! There are services that will check your credit, Equifax being the most well known and works in the U.S. and Canada, and these services are exactly the same as the ones that companies use when deciding whether or not to give you a loan. It costs about $20-25 to have a credit report run, and will let you know whether you have anything to worry about, or whether anything untoward is happening. It is a good practice to run these once a year.
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Loading ...Tags: Bad Credit, Credit Check, Credit Report, Equifax
July 3rd, 2008 at 1:02 pm
It’s also important to mention that every time you make a request to check your credit, your credit score lowers by a few points (I believe it’s 3). When you shop around for a mortgage for example, after the first credit check, you have 30 days to allow other banks to check your credit rating without it affecting your score. After that 30 days, any subsequent checks will again lower your score. Weird but true. I was told they do this because continuously checking your credit shows that you’re potentially looking into borrowing more money, which could lead to more debt.
Another tip: I was told to never allow your credit debt to accumulate over 75% of your total limit, even if you pay off your balance every month. So if you have a $10,000 limit on your credit card, you should never accumulate more than $7,500 since that will also hurt your credit score.