What Does Your Credit Report Says About You? - By: Don Saunders

You perhaps know only too well that the information in your credit report is used by the finance and credit card companies when determining whether or not to extend credit to you, but do you know just what is actually in your credit report? For instance, did you know that the information which are contained in your credit report could influence whether or not you are able to buy that new house or will have to remain in your current 'shoebox'?

In many cases people believe that when a credit card company or other lender looks at your credit report that company is just looking at your credit score and, while this is definitely one of the things that they do look at, they are also looking at much more. Above all, lenders are looking at the amount of debt you have compared to your income and even fairly small accounts, like those with a mail order catalog company, will be considered as an income deduction when considering a loan application.

If a credit card company, bank or other lender concludes that you have less money coming in than you have going out then your request will automatically be turned down. Indeed, the law requires that a specified percentage of your income must be available to meet loan payments before the lender is permitted to approve it, regardless of the purpose of the loan.

A lender will also be looking back at your credit history for the last seven years to see how you have handled loans in existence during that period. In particular, they are looking at whether you have made payments on time and will take note of any payments which were more than thirty days late. It might not have appeared especially important to you when you ran into a few problems and were late with your payments for a few months on an account, however any lender is certainly going to take this into account when assessing the risk of lending to you now.

A lender will also see whether or not any of your accounts have run into debt during the last seven years and whether or not these debts have now been cleared. If there are outstanding payments on an existing loan agreement lenders will be very wary when it comes to extending you additional credit until these are cleared.

Finally, your credit report will also show if you have filed for bankruptcy, normally in the previous ten years. Some people believe that a company is far more likely to lend to you if you have filed for bankruptcy as they enjoy the protection of knowing that you cannot file again for a number of years. However, this is not true and filing for bankruptcy is seen as a red flag by the finance and credit card companies showing that you have already demonstrated a tendency for getting yourself in over your head when handling your finances.

Your credit report is an important document which you ought not only to understand but which you ought to review occasionally for your own protection and peace of mind. Luckily, the law requires that you be provided with a copy of your credit report once every year on request.

About the Author

TheDebtAssistanceCenter.com provides information on how to obtain your free annual credit report and answers a wide range of questions such as how can I remove a judgment from my credit report?

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