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“One Man’s Opinion”
By: Don Calamaro
How’s your credit? You may think you know the answer to the question, but oftentimes our view of our credit and that of prospective lenders is vastly different!
To understand how others view your credit, it is important to periodically check your credit report. A credit report provides prospective lenders with a complete picture of your credit history. Most credit reports include the following information:
- Your current outstanding debt, including:
- Revolving debt (credit cards and retail cards)
- Installment debt (fixed payment loans, like auto loans)
- Real estate debt (your outstanding first mortgage balance)
- Your credit information
- Percentage of credit available
- Number of satisfactory credit accounts
- Number of currently delinquent accounts
- Number of accounts that were delinquent in a certain time frame
- Amount of money past due
- Number of inquiries into your credit in a certain time period (3-6 months)
- A Credit Score, which is a numerical score based on positive and negative factors on your credit report. There are many different ways of computing a credit score (each company that provides reporting uses a different methodology and weights factors differently), but usually you are compared against other people in similar income situations to determine your credit score and creditworthiness
So, is the picture that a credit report is presenting to potential lenders accurate? Unfortunately, oftentimes it is not! There are many potential reasons for errors on credit reports, including:
- Identity Theft
The horror stories are well known of individuals opening accounts in the names of other, unsuspecting individuals. This has become a major problem in the U.S., and will only escalate with a new generation of tech savvy “cyber thieves”.
- Wrongly Reported Late Payments
Sometimes the mail is late! And often you may not know that a creditor has received a payment late and reported you to the credit bureau. A simple mistake of a wrong address or zip code on a bill could create a late payment history, adversely affecting your credit.
- Credit Fraud
A stolen credit card number can result in thousands of dollars of unauthorized charges on an account. The result could be a refusal of creditors to grant additional credit, not to mention the headache of proving that the charges are a result of fraud.
It is recommended that you check your credit often to identify mistakes and problems. The earlier issues are detected, the easier to clear up! There are many companies that offer a free credit report, as well as a credit monitoring service that will alert you to credit report problems like late payments unusually high charges, new accounts that have been opened in your name, and credit inquiries. One company, Experian, has an excellent credit monitoring and credit reporting service. You can receive a free credit report from Experian by clicking here.
One Man’s Opinion!
“One Man’s Opinion” is written by syndicated columnist Don Calamaro. Don holds an MBA from Temple University in Real Estate and Finance. His column delivers practical advice that will help you save money.
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