Your credit report is a listing of all outstanding debts and open lines of credit. This includes credit card accounts, personal loans, student loans and any other types of credit you have obtained over the course of your lifetime. Even when an account is closed, a summary of your payment history and total balance will remain on your credit report.
All of the information on your credit report is used to calculate your credit score. Your credit score is used to determine your creditworthiness when you apply for certain loans or credit cards. The higher the score, the more likely you will be approved for a loan.
The credit report score is broken down into the following categories with various ‘weights’:
When you are looking for financial assistance, your credit report is pulled by a number of companies and organizations. When you apply for a credit card or request an increase to your credit line, the bank or financial institution that manages the credit card account will look at your credit score to determine your creditworthiness.
When you apply for a personal loan from a bank, the lender will need to review your credit report in detail; they will verify if you’ve been paying your bills on time and how much outstanding credit you already have. Keep in mind that each bank and financial institutions has its own criteria for evaluating your application.
If you’re applying for a student loan from the federal government, your credit report may be pulled as part of the application. However, most student loans are typically granted based on financial need and based on your or your parent’s income level.
Making sure your credit report score is accurate and up-to-date ensures that you’re being offered the best rates and loan options when you do apply for additional credit. Any discrepancies or errors in your credit report can lower your credit score and make it difficult to get a loan or a new credit card.
Article Written By: Sabah Karimi; Sabah is a busy writer from Orlando, Fla., who is passionate about writing on health and fitness, beauty, fashion and style tips, spa and travel topics. She now uses her expertise as a freelance writer to contribute to both DivaVillage.com and VillageMAMA.com.