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Control Your Credit in The United States

What is a credit report ?

A credit report is a record of your credit activities that lists credit-card accounts or loans you may have, the balances, and how regularly you make your payments. It also shows if there has been any action has been taken against you because you have not paid you bills.

The four most common pieces of information on your credit report are: 1) Identifying information like your name, any aliases, current address, previous address, social security number, date of birth, current employer, past employer, and, if you are married, the same information about your spouse. 2) Credit Information like what bank accounts you have, credit cards with stores, general credit cards, if you pay your utilities on-time, mortgages, student loans, revolving credit, installment loans. Loan information will likely include when you opened the account, your credit limit, the loan amount, who the co-signers were on the loan and your payment history. 3) Public information like any bankruptcies, tax liens, monetary and non-monetary judgments. 4) The names of whoever got copies of your credit report in the past year (for credit cards) or two (for employment purposes).

Your credit history remains on file for about seven years, usually. Personal bankruptcies will be on your credit report for ten years.

Who can look at your Credit Report?

Employers often check to see if you are reliable before offering you a job. Landlords usually want to see it to make sure you will live up to your lease. Lenders, like banks and mortgage companies check before offering you a loan. And, you can get a free copy of your credit report, if you live in the US, once a year, by calling 1-877-322-8228.

What is a Credit Score

Creditors use a credit scoring help determine whether to give you credit, and if so, how much. Your credit score will usually be determined by; Payment History, Amounts Owed, Number of Accounts Owned, Length of Credit History, New Credit, Types of Credit Used. Creditors use a statistical formula to compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor. A total number of points a credit score helps predict how likely it is that you will repay a loan and make the payments on time in other words, how creditworthy you are.

There is a big difference between having good credit and bad credit.

As an example, say you want to buy a used car for $12,000, with a down payment of $2,000 and a loan of $10,000. And you want a 48-month loan.

If you have a good credit score of say between 720 and 850 you might get a loan at an annual percentage rate of 4.97%, and your monthly payments would be $230. You would end up paying $1,047 in interested over the course of the loan.

However, if you have a not-so-good credit score of say 500 to 589, you might get a loan at an annual percentage rate of 15.83%, and your monthly payments would be $283. You would end up paying $3,562 in interest over the course of the loan.

About the author

Mark McCracken

Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English".

Copyright © 1997 - 2009 by Mark McCracken , All Rights Reserved