Your credit report contains information about how you've used credit in the past. It is a record of your payments on credit cards, car loans, student loans or home mortgages. Companies that loan money look at your credit report to determine your ability to pay back your debts on time. This is known as your credit rating.
Information on your credit report comes from companies that have loaned you money. National credit reporting agencies, also known as credit bureaus, organize the information and keep credit reports on file. Anyone who has ever used credit to buy anything probably has a credit report.
Beware of these credit "fixes"
Quick fixes: Beware of companies or services that promise to fix your credit quickly. They can be dishonest and expensive. No one can speed up the process. The only solution for credit problems is to get out of them by paying off your debt on time.
Debt restructuring: Never sign a contract or other "credit payment plan agreement" except with a reliable counseling service, such as a nonprofit. Be careful about agreeing to "debt restructuring plans." Their plans may lower your monthly payments but they will extend the length of time it will take to pay off all of your debts. Your total debt amount can grow from additional finance charges. Many people get deeper into debt after restructuring because they didn't understand the terms of the debt consolidation agreement.
Credit Fraud: Do not work with any agency that offers to change your Social Security number to get a new credit identity. Changing your Social Security number to avoid debt is fraud and a federal crime. A company that suggests for you to do that is performing an illegal activity. You could be arrested for following the company's advice. If a company offers to change your Social Security number, report it to the Federal Trade Commission and local consumer agencies.
Why do I need Credit?
Having credit (you have used credit cards or loans in the past) allows you to apply for a mortgage for a new home, or finance a new car.
Basically, any time you want to borrow money from someone, your chances are much better if you have borrowed money and repaid it on a timely basis in the past.
What are the benefits of having a good credit rating?
A good credit rating:
A poor credit rating:
You have the right to order copies of your own credit report. There are three major credit bureaus, all of which may contain different information about you. Here are the names, telephone numbers and web addresses of the three companies:
How can I improve my credit rating?
How much you can improve your credit rating depends on your situation. But you should always try to act as responsibly as possible. Repairing a damaged credit history is not impossible, but it does take time and motivation. A weak credit report includes a pattern of late or missed payments.
You can begin to improve your credit rating right away by making at least the minimum payments on time. Within a few months, your credit report will show that you are managing your credit responsibilities better, and your credit rating will improve. But it may take a few years for your rating to be completely rebuilt.
As you're rebuilding your credit history, keep the following tips in mind to help you stay on track:
|Title:||Your Credit Rating|
|Certain materials herein are included under the fair use exemption of the U.S. Copyright law and have been prepared according to the educational multimedia fair use guidelines and are restricted from further use. This work may be protected by further copyright, reproduction and distribution in violation of United States Copyright Law is prohibited.|