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Your credit will have a direct effect on your
ability to obtain a loan and the interest rate you receive.
Lenders generally reserve the best interest rates for their
clients with the best credit ratings.
Therefore, you will want to pay close attention to your
credit rating and what you can do that affects it.
How can I obtain my credit report?
 The
first thing you will want to do is obtain a copy of your credit
report. You should do
this at least once a year to help curb identity theft anyways.
The Fair Credit Reporting Act allows everyone in the United
States the ability to receive a free credit report once per year
from the three main credit report agencies – Equifax, TransUnion,
and Experian.
You can obtain your free credit report from
www.annualcreditreport.com. Make sure to spell it correctly – as
several fraudulent sites exist with similar names.
Do not pay attention to advertising for any other web site or
service that offers free credit reports.
This is the only truly free location to obtain them.
Follow the directions on the web site to receive your free
credit report. Make
sure to print out a copy, as once you close the browser you will not
be able to receive your credit report for another year.
Also, the credit reporting agency will attempt to sell you
several services – you do not have to purchase any of these to see
your credit report.
Will inquiring about my credit affect my credit?
 One
confusing question that many people have about credit reports is
whether inquiring about one’s credit rating will affect the credit
rating itself. The
answer to this is “yes and no”.
Each inquiry does in fact negatively affect your credit
rating, but the credit agencies are aware that people like to shop
around for rates.
Therefore, if you submit your information to five different lenders
to inquire about a home or auto loan, and these inquiries occur
during a thirty day period, all five inquiries will only count as
one. However, multiple
inquiries for credit card applications will have a negative effect
on your rating.
Note that the maximum affect credit inquiries
can have on your credit score is 10%.
After twelve months credit inquiries are removed from your
credit report.
What else affects my credit report?
The following will negatively affect your
credit rating.
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Bankruptcy
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Foreclosure (worse than bankruptcy)
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Not paying bills on time
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Maxing out credit cards
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Credit card balances over 50% of the
maximum credit limits
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Having many credit cards
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Closing paid off credit cards – the
amount of time the card is open factors in to the credit rating
The following will improve your credit rating.
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Pay down credit balances
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Make payments on time
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Obtain credit reports and dispute
errors (approximately 29% of all credit reports contain serious
errors, 70% contain minor errors)
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Credit repair agencies
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