Good Credit Reports are like Free Cash!
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A credit report quite simply is a 7 to 10 year detailed report of your past credit history. It gives information such as; your name, addresses, Social Security Number, current and past employers and your current and past credit accounts and/or loans. This would include banks, retailers, credit card issuers, etc. It will also include public record information like bankruptcies, tax liens, etc. Basically it tells a possible lender; "Can I trust this person to pay me back based on their history or credit report? "
Why is a Good Credit Report Important?
Sure, you can listen to those TV ads at midnight that promise quick easy financing even if you filed for bankruptcy. Or how about the daily e-mails you receive claiming that you are "pre-approved" and you too can get "easy credit". You can get these loans or credit cards, but you will also pay double, triple, maybe even quadruple of what a person with a good credit report pays.
An example is that a person with good credit may get a $17,000 five year loan at 8%, which would end up costing them $22,000 ($5,000 interest)for the total price of the loan. That same person with a bad credit report will pay a higher interest rate because of the higher risk to the lender. Their $17,000 five year loan may be at 24%, which would end up costing them $34,000 ($17,000 interest) for the total price of the loan. This is a $12,000 difference over 5 years!
That's a pretty good family vacation. Magnify that over a $300,000 mortgage loan and you can really feel the impact of having a good credit report.
A Good Credit Report Isn't Just a Monetary Factor
Having a good credit report can impact more than your wallet. It is much easier to obtain more credit with a good credit report. If your car breaks down or you need a major house repair, it is nice to know you don't have to worry about how you will cover the cost. Also, insurance companies and employers are checking credit reports more than ever. Get that edge on your competition for that job opening, and lower your insurance rates with that good credit report.
Bad Credit Report? It Can Be Fixed!
Just because you have bad credit it doesn't mean all is lost. Here are a few things you can do to repair bad credit.
- Go through your credit report with a fine tooth comb. Question any discrepancies on your report.
- Be cautious of companies that say they can repair your credit instantly. You can probably do it yourself at little or no cost.
- Call a nonprofit credit counseling service to help restore order (maybe a consolidation plan) and help create a repayment plan at a lower interest rate.
Access to a Credit Report
Obtaining your credit report is very simple. There are 3 major credit reporting agencies. Just go online or look in the phone book. Most reports cost under $10 or you may qualify for a free report if you have been denied credit in the last 60 days. Bottom line: Don't be scared to find out where you stand! A good credit report will save you a ton of money interest, not to mention the peace of mind.
Posted by jonathan on February 03, 2005 at 07:09 PM