What you need to know about credit score
If you survey a group of people; maybe your peers or strangers, you will realise that some have no clue about the number on their credit score.
11:48 04 February 2014
Credit information is a matter of public record and there is no use in trying to hide it or alter it. Your financial history is very important. It determines whether you can get access to a mortgage or not, whether you can rent a flat or not or whether you get a loan. When you walk into a financial institution with the hope of getting a loan, the first thing the loan officer looks at is your credit score.
So how do financial institutions come up with credit scores? They first of all take into account your financial history. Most people share the pre-conceived notion that credit scoring is done through a universal service or a system. This is not true. Different lending institutions have their own ways of calculating your credit score meaning that there is no blacklist.
Understanding a credit report
This is a document that has all your financial information ranging from borrowed funds, missed payments and debts. This information is kept on record for a period of up to 6 years.
What is contained inside a credit report?
This is information that is on public record. Lending institution share information about you among themselves. Below are some the contents
- Credit accounts
- Missed or late payments
- Bank accounts and overdrafts
- Personal details
- Previous addresses
- County court judgments
- Moved from your home to avoid paying debts
How to improve the credit score
- Ensure that the information contained in the report is factual and correct
- Display some stability in your living arrangements
- Don’t apply for loans too often
- Close unused accounts
The above is just some of the basic information that you should know about credit scores. You should be able to financially smart enough to assess your current situation and take a sound approach to correcting it if your credit is bad.