No credit homes
There are many loans in the market and everyday some new lucrative deal is being advertised. In these days when every-one is cashing on the equity generated in homes due to the increase in prices of real estate, taking advantage of easy loans for home improvements etc. is everyone’s dream. But the question always looms large ‘Will I qualify for the loan ‘ . In general granting of loan is a subject which is tackled by banks and financial institutions by referring to the no credit homes report of a borrower. Every individual has a credit report .Understanding, what it is And how it effects is very useful for everyone .
What is a credit report
There are some companies known as Consumer reporting agencies (CRA) which gather and sell information about the credit activity of individuals throughout US. This information is stored in giant databases and these companies charge fee for supplying this information in the form of a credit report.
A credit report is a record which lists any no credit homes card account or loans a person has. It also records the way the payments regarding the loans have been made in past and if any action has been taken against a person for not making payments in time.
FICO is an acronym for Fair Isaac Corporation. This company has developed formulae to calculate credit score that straight away gives the idea about one’s credibility to any lender. In United States this is the best-known credit score model and is used by all banks etc. There is another score known as BNI score which is used to study the likelihood of bankruptcy.
The three major no credit homes reporting agencies in the United States, namely Equifax, Experian and TransUnion calculate their own credit scores. .While all were developed for the agencies by Fair Isaac but they all differ, and these are periodically updated. Fair Isaac offers scoring models for the U.S., Canada, and South Africa. It also offers a "Global FICO" for many other countries.
Fair Isaac has disclosed the following components and the approximate weighted contribution of each:
35% punctuality of payment in the past
30% capacity used: the ratio of current revolving debt taken to total available limit of revolving credit that can be taken.
15% length of credit history
10% kind of credit used like installment, revolving or consumer finance
10% recent search for credit and/or amount of credit obtained recently
Range of scores
FICO scores generally range from 300 to 900.
660 or above is generally regarded as excellent and with this type of score one can expect to get good loan at a reasonable rate. Lesser than 620 is considered to be bad history. The performance of scores is periodically updated and monitored. Even if one has a low score at one time, the scores can improve if his repayments are made more regular.
For any given scoring model each individual actually has three no credit homes scores because the three credit bureaus hold their own, independent databases. These databases are independent of each other and may contain entirely different data. Lenders in general acquire data from all the three databases to make an average to guide them.
A Credit report consists of
1. Identifying Information: Your full name, current and previous addresses, social security number, year of birth, current and past employers, and, if applicable, similar information about your spouse.
2. Credit Information: The accounts you have with banks, retailers, credit-card issuers, utility companies, and other lenders
3. Public Record Information: State and county court records on bankruptcy, tax liens, or monetary judgments
4. Recent Inquiries: within the past year (two years for employment purposes) the names of those who have obtained copies of your credit report.
Credit bureaus collect this information from parties that have previously given loans to you, such as a department store that issued you a credit card or a bank that granted you a personal loan
Good or bad, generally, all this credit history information remains on the report for seven years. If you file for personal bankruptcy, that fact remains on your credit report for 10 years.
How Do You Get a Copy of Your Credit Report
You are entitled to receive one free credit report every 12 months from each of the nationwide consumer credit reporting companies—Equifax, Experian and TransUnion. This free credit file can be requested through www.annualcreditreport.com or by contacting the companies directly by phone or by mail as listed above.
With each other the three large bureaus do not share information. The content of credit report can be different at each bureau, so it's a good idea to request copies from each one.
Credit History
When a loan application is processed all lenders like to see the credit report before taking any decision. Hence it is advisable to have a copy months before applying for loan plus one should be sure of what is written in it. If there is a wrong entry it should be rectified or at-least a mention should be made by the bureau in your credit report. This can easily be managed by writing to the bureau beforehand.
Late payments
In general the mention of previous late payments in credit reports create problems. One or two late payments however have no effect but if one has a history of this then the things can go wrong. Even if the lender does not refuse a loan, he will give it at a higher rate of interest.
Bankruptcies and foreclosures
There's no getting around it, a bankruptcy on your credit report is not a good thing. But that doesn't mean you still can't obtain a loan. Lenders will often consider the circumstances surrounding a bankruptcy (family illness, injury, etc.) even though a bankruptcy may stay on your credit report for seven to ten years. Moreover, if you have reestablished good credit since the bankruptcy, a lender will be more inclined to approve your application.
Conclusion
Credit report is an important document and care should be taken to keep it correct. Every citizen is allowed to take a copy at-least once a year. This should always be taken and one should look for wrong entries. If there is some mistake then this can be rectified by giving in writing .Normally it takes about 45 days to accomplish this. Even if one is not taking any loan this side should be checked as one never knows when the need can arise of taking a loan.
Other Articles
