Getting a free credit report is a good way to obtain an overview of your financial health. It also lets you see how attractive – or unattractive – you might be to prospective lenders.
Credit reports basically provide you with your credit rating or score. This information is used by anyone with whom you might enter into a borrowing arrangement; for example, a credit card company, mortgage provider or bank or building society for a loan. The reports allow lenders to judge whether you are a potentially good customer for them.
This doesn’t necessarily mean that they are only concerned with how big a risk you might be in terms of being able to repay the debt. Lenders are also looking out for people who always pay off their credit card bill on time every month or switch cards regularly to get 0% deals. These customers are not going to make them any money in the way of charges so may also be deemed unappealing.
It’s worth checking your credit rating annually. Look out for any mistakes and make sure all the information is up to date, especially if you have moved house. It’s also a good way of making sure that you are not a victim of identity theft by ensuring that no applications for credit have been made in your name by someone else.
To fully make sense of your credit report you need tips on ratings and what they mean. Basically, the higher the score you receive the more likely it is that you will be able to access a better range of loan, mortgage or credit card deals. Better in this case means the ones with the lowest rates.
Apart from giving you a number, your credit report should also put that figure into some context for you so you understand what it means and how that will impact on your ability to get the credit you want.
Remember that your credit score is a snapshot of your financial circumstances at any given time and it is something all of us can actually influence and change. If you know you are going to be applying for something very important like a mortgage or a loan, it’s a good idea to check your credit rating in advance. That way you will know if you need to do anything to improve it to ensure you have the best possible chance of getting the product you want.