We all know that when we approach a lender for money – regardless of the particular loan or the purpose for which it will be used – the lender qualifies us (or disqualifies us) based upon a number of different factors. Essentially lenders are called upon to establish our creditworthiness – the likelihood that we are going to repay the loan amount on time and in good standing. And nothing speaks to the likelihood of our future behavior like that of our past actions; something that is very clearly communicated in our credit report.
Our credit report is the entirety of our financial life – including the loans we have procured in years’ past, the loans we applied but for which we were turned down, the number of times we made late payments to particular creditors, the number of years that accounts have been open, which accounts have been closed, the amount of credit we have extended to us presently and how much of that has currently been used, any loan defaults, bankruptcies, and judgments that have been leveled against us, and a variety of other information that is all used to ultimately calculate our credit score – the three digit number that tells potential lenders at a glance if we are considered a good credit risk or too much of a risk.
And, of course, there really isn’t just one credit report but rather, three as generated by each of the three credit bureaus that are ultimately responsible for collecting the information that is then yielded in their report. As consumers we have the right to see what potential lenders are seeing when they go to qualify us for a loan, and subsequently we are entitled to receive a free credit report from each of these three bureaus each year.
This has always been an important right to take advantage of for obvious reasons but today it is even more important as our credit score is currently being given more weight than ever in this tough lending market.
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No matter where we are going we need a map in this life; it doesn’t have to be an actual physical map - more of a plan for where you are going and how you are going to get there. Goals pursued without a plan are subject to abject wandering and an eventual loss of direction. When it comes to our finances, nothing is better served by the use of a well-laid plan of attack. For most of us, our younger years are for exploring and there may not be a really clear direction of what is to come next. But these are what these years are for, after all. The problem is that this is coincidentally the time when many people first begin to get into financial trouble; they simply don’t give any thought to the future or what the consequences will be for all that debt they are racking up month to month. The ignorance of youth – certainly in this circumstance – is indeed bliss.
Later on, of course, we are forced to deal with the repercussions of our financial behavior and perhaps a damaged credit report as a result. As we soon learn, the consequences for damaged credit can mean that we are not extended credit later on in life when we really need it to get a car or buy a home. And so we begin the process of trying to repair the damage we have caused so that we are in a better financial position going forward.
In this particular journey in life our credit report serves as our map; it guides us in our quest of determining what is best to do and will give us an honest assessment of where we stand, where we need to go and what we have achieved through our efforts along the way.
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If we were to believe everything we see and hear right now we would be hard pressed to be convinced that we are in anything other than a full blown financial crisis. Times are tough to be sure but most of us have been convinced that we will not receive a loan right now so there’s no point in trying; there’s no point in trying to take advantage of the low interest rates and refinancing our homes, there’s no point in trying to get a school loan for our child, there’s no point in trying to consolidate our debt through a lower interest loan, there’s no point in doing anything other than waiting it all out.
While it’s true that lenders across the board have tightened their purse strings and are scrutinizing applications with renewed fervor and stricter qualification guidelines, there is also the reality that many of us ignore – and that is the fact that we are in control of our ability to receive financing by our behavior; that which is reflected on our credit report.
So before full blown panic sets in and we are completely convinced that we have no hope, it pays to find out exactly what it is that our credit report is…well…reporting. And the way to do that is by ordering free credit reports, something that we are all within our right to receive once a year from each of the three credit bureaus.
Ordering free credit reports is easy enough to do as we can access the three credit bureaus – Experian, Equifax, and TransUnion – online where we can order a free credit report and finally know once and for all what our credit score is from each of them and what that score is being based upon. Then and only then can we take steps to fix our credit if it needs fixing or have the peace of mind that comes with knowing that our credit score will give us borrowing power even in this economy.
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The economy would have us believe that everything in terms of lending is dried up; gone the way of the many lenders who have closed their doors and hung out their “out of business” signs. Are times tough? Sure. But that doesn’t mean that we are completely without options when it comes to lending even if we have experienced credit problems.
Those with issues on their credit report may feel as though they are stuck until the economy vastly improves; and it’s true that conventional lending has become far stricter in terms of qualifying applications. People are just not getting the loans they once did and they are feeling the pinch in all areas of their life.
But in terms of the plastic on which we are so reliant there are still credit cards for bad credit that allow people with less than stellar scores the opportunity to enjoy financing – albeit, often in moderation. Credit cards for bad credit may refer to those cards that carry high interest rates in order to protect the interests of the lender; a price that those with less than perfect credit sometimes have to pay in the interest of establishing credit and even working towards improving their credit score.
Additionally, there is also the option of secured credit cards which provide the cardholder with a very low credit limit and is backed by funds - equal to the credit limit – that are deposited by the cardholder into a secured account which is held by the lender. These funds are the guarantee that the lender will get paid even if the cardholder defaults on the loan. Again, while they may not be ideal, secured credit cards offer options for those who need to rebuild their credit and, ironically enough, need a credit card to do so. Credit cards for bad credit and secured credit cards will give consumers the time and the resources they need.
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Credit is a tricky thing; there is so much perception about finances and lending that most of us have the ability to simply scare ourselves out of wanting to know the details. It seems sometimes that the less we know, the better off we are. Of course, as with anything else when it comes to finance, knowing less about our credit report is not likely to better us in any way. We are too often a product of our own fear; when if we only took the time to familiarize ourselves with our financial information we could easily attain a comfort level that would allow us to do ourselves good.
How many of us have been turned down for a loan and seen a copy of our credit report at the time? That may have been the last time that we set eyes on this information, assuming – even if it was five years ago – that this information was unchanging and we were destined to a life with bad credit. The truth is that a credit report changes all the time; and, in fact, one credit report may not be the same as the next as there are three separate credit bureaus that collect our information and create their own credit report, complete with calculating our credit score.
In order to be up to date on our credit report we need to be committed to collecting the information year to year; something that is easy to do. By going to www.annualcreditreport.com, consumers can order their free credit report from each of the three credit bureaus. You can order free credit reports all at once or stagger them throughout the year (by law consumers are entitled to one free credit report from each of the bureaus once a year).
Either way, by familiarizing ourselves with the information on our credit report we are engaging in our own financial life and taking strides to stay in control.
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Let’s face it; there are very few of us who are being lent money right now; lenders are understandably nervous and a process that was relatively lenient just a year ago is now infused with safeguards that are meant to protect the lender at all costs. This means that most people are simply not able to qualify for loans right now; the mortgage process is all but stalled in many states and unsecured loans are simply a thing of the past – at least for now. Those of us who are paying on a new loan were qualified for this line of credit; which means that our credit report was outstanding and worthy of passing even this strictest of standards.
As with any new loan, consumers should be sure to stay on top of their credit report as to make sure that no erroneous information makes its way to the credit bureaus. Mistakes happen; and in this day and age mistakes on a credit report can render consumers unable to receive any further credit lines as everything is being scrutinized so closely.
So if you haven’t gotten into the habit already, now is the time to start making sure that you are ordering and receiving free credit reports throughout the year. Free credit reports can be requested by each of the three credit bureaus – Experian, Equifax, and TransUnion – once every year and those consumers that take advantage of this right are able to stay abreast of what is happening with their very important financial biography.
When it comes to a new lender it is especially important that you continue to review your credit report in order to make sure that all is being reported accurately. If you notice anything off – through your constant vigilance with your free credit reports – you can immediately take care of it so it does not have the opportunity to damage your credit.
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Oh the dreaded credit score; that three digit number that inspires dread in many of us as we know that this one number can determine whether we are approved for everything from a mortgage to a credit card. So intimidated are many of us by this number that we stick our heads in the sand; not wanting to really know the reality of our situation and appeasing ourselves by saying that it can’t be too bad.
Eventually all of us are faced with our credit report. Lenders turn to one or even several of the three credit bureaus – Experian, Equifax, and TransUnion – to get our credit report before making a decision about whether or not to qualify us for a particular loan. Our credit report gives lenders our financial history that will include such things as late credit card payments, car payments, or mortgage payments as well as any loan defaults.
But more than anything, the credit score is the most important of the factors to be found on a credit report. Essentially a credit score is a number that is assigned to you based on your financial standing compared to all the rest of the people who also have credit scores. The factors on which a credit score are calculated include payment history on accounts including credit cards, mortgage, car loans, and others, late payments and the amount of time behind on those accounts, accounts that have gone into collection and the amount still owed on them, any loan defaults, bankruptcies, lawsuits, or liens, amount currently owed on accounts, history of credit which specifies the length of time that accounts of have been open, and recently opened accounts.
A credit score of 700 or above is considered to be excellent; 680 to 699 is good; 620 to 679 is fair; 580 to 619 is moving into the poor category; and below 580 will generally mean that you are paying much higher interest rates if you are extended credit at all.
Free credit reports let you know the credit score currently being reported for you by each of the credit bureaus (don’t expect it to be the same across the board) and will give you the information you need to make changes if necessary.
Popularity: 20% [?]
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We all know that knowledge is power but what does that really mean? When it comes to finances, knowledge refers to a comprehensive understanding of the reality of your financial situation; not the fantasy that so many of us live in on a day to day basis wherein we pay no mind to the mass amount of debt that we have accrued and are inclined to believe that we are creditworthy when in fact our credit score would loudly say otherwise.
Taking control of finances simply cannot be done until we are dealing in reality. And so – in this New Year – as we start anew and tackle the many things that are important to us in 2009 it would make sense for most of us to become as educated as possible about our finances so that we can then move forward with all the tools that we need on hand.
Getting our credit report means getting a credit report from each of the three large credit bureaus – Experian, Equifax, and TransUnion - which can be done by ordering free credit reports through an online portal; something that can be done in minutes.
Free credit reports can be ordered once a year from each of the credit bureaus and should be ordered faithfully if we are to really commit to taking financial control in the New Year. And the Internet has made it easier than ever; while we used to have to submit a request in writing in order to receive a free credit report, today the methods by which we can order free credit reports are easy and convenient – giving us no excuse for not knowing where we stand with our credit score and other financial particulars.
Conversely, by failing to stay informed and on top of this information we could be allowing ourselves to fall deeper into trouble, credit scores can drop due to erroneous information or we could miss the telltale signs of identity theft.
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Getting married is a huge commitment; something (as the ceremony states) that should not be entered into lightly. Couples enter into such a commitment everyday feeling at the time as if they know everything there is to know about each other. They have often dated for many years and have had all the conversations – everything from religion and children to careers and housing. But what many couples fail to discuss before they are married is the very thing that can be their downfall – money.
It’s amazing how many newly married couples have never had a discussion about finances – about what money means to each of them, about what they expect from each other in terms of the roles that each will play in budgeting, saving, and handling the household finances, about whether they will have a joint account or keep their money separate, about the feelings that money brings out in them, about their goals for the future, and all the rest. Unfortunately, too often, when these all so important discussions do wind up happening it is when an issue arises and it must be addressed and by then there has been enough confusion, bitterness, and hurt feelings to go around.
Money is one of the top reasons – if not THE top reason – why couples divorce so it would stand to reason that it would be something they would address before they marry. Couples should have an honest discussion before marriage in which they put all their financial cards on the table, including disclosing all debt, the state of their credit report, and their expectations from each other going forward.
Free credit reports should be ordered – for each person – from each of the credit bureaus once a year so that married couples can know where they stand in terms of their credit score and make sure they are both on the same path towards mutually defined goals.
Popularity: 20% [?]
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Now is not the time to be spending unnecessary money; even a penny saved is significant at the present time and we are all undoubtedly doing what we can just to survive and be as fiscally responsible as we can - at least in our own household.
There are expenditures that we can only do so much to control although we still look at all the ways possible for us to shave money off of payments including lowering the interest rate on our mortgage through refinancing, finding the best deal on car loans, and minimizing our utility packages down to basic services that can ultimately save us hundreds of dollars a year.
But one area in which most of us could make some significant changes and realize subsequent savings is in the area of credit card debt. First and foremost, most of us carry way too much credit card debt and if we hadn’t already, recent economic changes have forced us all to take a cold hard look at our accumulated debt and what that means not only to our cash flow but our credit report.
Further, the fees that we wind up paying for our credit cards are what eventually put us over the top in terms of paying through the nose. In this respect it can pay dividends to compare credit cards in order to find a situation in which we are not overpaying in fees and interest rate. When you compare credit cards you are able to look at all the deals available to you and make a decision with clarity rather than just signing up for every card that is offered to you.
And for those who want to consolidate their debt by transferring all of their credit card debt to one, low payment card, the time spent to compare credit cards will be well worth it in the end.
Popularity: 25% [?]
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