Mistakes on your credit report impact your credit score

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The basics of creditworthiness
3 years ago
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Many people don't bother to think about their creditworthiness until they run into problems trying to obtain a loan. If your credit report reflects late payments, unpaid bills, and a significant amount of debt, you're not likely to be able to borrow money to purchase a home or car, or even open a new revolving credit account.

Impact of Negative Credit Reports
All information on your credit report impacts whether or not lenders will consider you to be a creditworthy candidate for financing. Negative information on your credit report can keep you from being eligible for any type of financing. If your credit score is poor, if a lender is willing to take a chance on you, it is likely that you will have to pay an exorbitant rate of interest.

Verify Credit Reports Regularly
Mistakes on your credit report impact your credit score just as much as accurate data. That's why it is so important to pay attention to your credit report all the time, not just when you want to apply for a loan. It's a good idea to check your credit report a minimum of once each year. This helps you identify payment and debt patterns that need to be changed in order to improve your credit rating.

It also allows you to verify whether or not the information reported is accurate. Identity theft is becoming increasingly common. By checking your credit report regularly, you will be able to tell if someone else is opening charge accounts in your name. You will also be able to catch data entry and reporting errors which actually occur quite frequently.

If you notice incorrect information on your credit report, it's important to immediately request corrections. You should contact any creditors who have reported erroneous information to ask that corrective action be taken. You may also file disputes with the credit agencies. This can improve your credit, but it takes time. If you don't start this process until you need a loan, you are likely to find yourself unable to secure the funding you desire.

Minimize Debt
The amount of debt you carry also impacts your credit score. If you are carrying a significant amount of debt, it's likely that your income-to-debt ratio can prevent you from being considered to be creditworthy. Make sure that you make all payments on time, to establish a positive repayment track record, and come up with a plan to reduce your debt load. When lenders see that you are responsible in terms of making payments and keeping your total amount of debt under control, they're likely to view you as a creditworthy individual.
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