Your credit report and credit score are
key tools that measure your financial risk, giving lenders a way to
predict how likely you are to pay your bills on time. Many lenders
— and others — use your credit score to help determine whether or
not to give you a line of credit. Creditors don't just look at one
or two things — they look at several things that ultimately
come together to build a financial profile of you, such as:
- Your monthly and annual income.
- Your monthly payment obligations — Includes rent, student loans, medical bills, car payments, utilities,
telephone/cell phone/cable, etc.
- Are your financial obligations in line with your total income?
- Are your monthly payments in line with your monthly income?
- Do you pay your bills on time? Late payments, defaults and other repayment issues can remain on your
credit report for up to seven years.
- Do you have outstanding traffic or parking tickets or other government-issued citations?
- Do you have any kind of credit history?
- How many credit cards have you applied for in the last few months?
- Is there a record of a collections agency being hired to pursue you for outstanding payments to creditors?
Potential lenders find this information
in your credit report, which is updated on an ongoing basis with new
information. A third party — such as a credit issuer,
prospective landlord or prospective employer — can secure your credit
report when they have a “permissible purpose” under the law. They
will find your credit report by going to one — or all — of the three
major credit reporting agencies: