Think you have good credit? Better check.
A credit report, which is a record of personal lending and payment, provides consumers with a comprehensive record of where they stand financially. Typically, a lender, employer or landlord will use this assessment to help determine a person?s credit worthiness.
“What we like to do is say ?yes? to people who want to apply for a loan, so educating consumers about what they can do is important,” said Neil Harrington, product manager for consumer loans for M&T Bank.
The credit report is broken into two parts: a three-digit credit score and a list of open accounts, payments received and other related credit activity. Credit scores are determined based on an algorithm derived by Fair Isaac Corp. that takes all financial activity and payment history into account, according to Kiplinger?s Personal Finance Magazine. Bankrate.com reported that scores run on a scale of between 300 and 850, with 45 percent of Americans scoring between 700 and 799.
But poor credit can be rebuilt.
Helpful hints provided by CnnMoney.com include paying bills on time, responsibly managing credit cards and not carrying an excess of accounts. Less than half of all creditors will report a delinquent payment after 30 days, but all will do it after 60 days.
Some other things to watch out for include consistently missing payments and juggling too many different accounts. It also is important to remember that visiting a credit counselor can affect a report, Harrington told The Examiner. While this visit might help someone struggling with finances to reset his or her life and payment plan, it will affect his or her immediate score and place a notation on the report.
“When you talk to consumers, the No. 1 thing for them to do is make on-time payments,” Harrington said. With credit cards “it?s not just paying as agreed, it?s the [amount of] use and the patterns of the use of credit.”
Consumers are entitled to three free credit reports each year, one from each of the major reporting agencies: Equifax, Experian and TransUnion.
More information
For more information about credit reports, consumer rights or hints, visit www.annualcreditre port.com, www.privacyrights.org or www.aiccca.org.
