Most people associate their credit report with the chance of obtaining new credit, and give no thought to the other reasons for how it may impact their daily lives. The negative aspect of bad credit is more often considered with a poor report being detrimental. The other way to see it is that a good credit report is helpful in many areas, opening doors and saving money.
Good Vs Bad Credit Score
It is up to each individual to build and maintain a good credit score to work in one's favour. A bad credit report can be rectified through various means and once a favourable report is achieved it should be maintained and checked regularly.
Who Pulls Your Credit Report?
So who pulls your credit report and why? It is available upon request for a number of reasons. Banks and creditors have the right to the information held, as do insurance companies, mortgage lenders, landlords and employers. It is in your own interest to maintain a good credit score and not have detrimental information on your record, as you can’t hide it.
It is clear why landlords want to assess the information held. A landlord does not want to rent his property to an irresponsible tenant who may have a habit of paying bills late. A landlord does not know the person and a credit check is a good method of assessing a stranger’s risk of paying the rent on time.
An employer on the other hand will be looking to establish an actual relationship with an employee and there are many more determining factors in a person's suitability than a credit report. Obviously, it is of prime importance for anyone looking for a job within the finance industry to have a top-notch credit rating, but less necessary for other employers to see.
On the one hand, a good credit report indicates responsibility, whilst a bad credit report can mean that a person just hasn’t built up a credit history, or a long history of good credit has been tarnished by one temporary blip. Nevertheless, some employers do take a credit report into consideration before extending an offer of employment. Employers may turn down an applicant due to bad credit on the presumption they are irresponsible and less trustworthy.
Ninety percent of insurance companies pull your credit report too, again looking for signs of responsible handling of finances Statistical analysis has shown that a person with a good credit report is less likely to be an insurance risk and make fewer claims.
Responsibility with credit is generally interpreted as responsibility in other areas of life, such as home security and maintenance, good car maintenance and safer driving habits. Thus insurance payments are influenced by credit scores and a good credit report can result in lower property and auto insurance premiums.
Mortgage Companies and Banks
Potential creditors, be it mortgage companies, banks, loan companies or credit card issuers all have the right to pull your credit report as their first move to assess your suitability. They want to safeguard the money they advance yo. What better way than to evaluate your credit report to get a full picture of your credit history.
They may turn you down flat, or they may offer you what you want subject to higher interest rates. Then again they may see a report with an excellent credit history and advance the mortgage or credit and consider you a valuable customer worth doing business with. A good report can work in your favour and lead to preferential rates and better deals. It could literally save you thousands of dollars in mortgage interest.
Final ThoughtsThis information shows the merits of maintaining a good credit report and the downfalls of failing to do so. Always check your reports, which are free annually, and ensure any errors are rectified before someone pulls your report. As you are aware that it will be checked, make your credit report work to your advantage.
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