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There were days when having a good credit rating was considered a luxury. Today it has become a necessity
In many ways you are your credit rating. Your credit rating is used not only by lenders but insurance, phone, utility companies, and even potential employers and landlords. Your rating helps them judge your creditworthiness and your reliability to repay them. Even if you aren't looking for a loan, your credit history can affect you!
Bad vs. Good Credit
Bad credit can occur when financial obligations are not dealt with in a timely manner. Default on your loan for some reason or you have allowed your debt to increase to such unmanageable levels that it has overcome your life. With bad credit, the opportunities that those with good credit have access to, are often not available. Creditors and lenders will likely deny your request for any type of loan or line of credit at all. You may have troubles renting a home or apartment and possibly for a job you're applying for.
A Good Credit Rating Can…
Staying on top of your credit may reduce the amount you'll pay for everything from insurance to installment loans. Having good credit can provide you with more freedom to shop around for loans and lenders. This can lead to:
Qualifying for lower payments and better rates
Less documentation and hassle
Credit line increases
More options available
If you have less than perfect credit, it's important to take steps to gradually improve your credit score. Once you have good credit, it's important to maintain that credit as well. When you know how to manage your credit activity properly, you are insuring yourself a great financial future.
A Bad Credit Rating Can…
Being credit challenged can create many financial obstacles, such as:
Higher rates on loans and insurance
Being declined for new accounts
No Credit line increases
Being rejected for jobs, apartments or insurance
Good credit can be established a number of ways. In financial terms though, credit scores are affected positively when a person has been successful at making timely and complete payments for all of their debts. These debts may include credit card debts, rent payments, utility bills, loan repayments and other types of financial obligations that require you to make an ongoing payment.
About Credit Scoring
Your credit score is a three-digit number is also known as a your FICO score. Insurers, employers and landlords may use this score to evaluate applicants. The scores range from 300 to 850, 300 being high risk and 850 no risk. Lenders use different ways to evaluate your score. That means that different lenders will rate you in different ways - and that can lead to various price points on your loan or line of credit.
Free Credit Reports
The three nationwide consumer reporting companies (Experian, Equifax, TransUnion) have setup one central website, toll-free telephone number, and mailing address through which you can order your free annual report. To order:
Click on www.annualcreditreport.com
Call 877-322-8228
No Credit line increases
Or Complete the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
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You may order your reports from each of the three nationwide consumer-reporting companies at the same time, or you can order individually. The law allows you to order one free copy from each of the nationwide consumer reporting companies annually.
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