Your Credit Rating Affects You,
and ... How to Check It.
You might not know it, but every time
you take out any kind of loan or credit or pay something back, it gets
counted on your credit rating.
Who keeps a record on you will vary
according to where you live, but the big three credit reference agencies
are Experian, Equifax and Trans Union. They will
provide your credit rating to any company that is thinking of lending
Included in Your Credit Rating.
All the debts you currently have are
included in your credit rating. There is a history of all the debts youíve
had in the past ten years or so, and special emphasis is put on anything
that has gone wrong. Defaulting (never paying) on any debt will ruin
your credit rating completely.
Borrowing a lot before you start
paying anything back will make you look like a very bad risk, and so
will going all the way up to (or even over) your limit on a credit card.
It is also worth considering that the
credit reports of anyone you live with may be linked to your report, and
could reflect badly on you - your wife or husbandís credit rating is
tied to yours quite closely.
Credit Rating is Worked Out.
The most common method of coming up
with your rating is called ĎFICOí, named after the Fair Isaac
Corporation, who invented it. Your current credit status is prioritized,
in this order: whether youíve paid past debts, how much debt you
currently have, your credit history, the types of debt you use, and how
many times your rating has been checked recently.
Things that happened more recently
are given more weight than things that happened a long time ago.
Credit Rating is Important.
Any time you get turned down for a
credit card or any other loan, the chances are that it was because of
your credit rating. Companies giving out small loans are far more likely
to rely completely on this rating than to bother checking your income,
and a worse rating will mean that you are offered a higher interest
Your rating is important when you get
car loans and mortgages too. You donít want to find a house you love
only to get turned down for the mortgage thanks to your habit of paying
your credit card bills late.
Check Your Credit Rating.
Credit reference agencies canít
hold your information on file without telling you what it is they have.
If you write them a letter and pay a very small fee, they have to send
you the full credit report that they have about you.
You can then check over your credit
rating, and send a letter back to the agency telling them about anything
that you think isnít right.
You might find that a screw-up has
made you look bad when it wasnít your fault. They will include
anything you send in your file.
In some countries, you may find that
you can sign up to get credit reports regularly for a small fee, or even
Make sure to check your local laws.