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Smart Loan Tips: The Importance of Credit Report Uncovered

Illustration for article titled Smart Loan Tips: The Importance of Credit Report Uncovered
Image: Image by mohamed Hassan from Pixabay

A variety of lenders always check credit reports of those who are applying for loans including mortgages and auto loans. It is their way of determining whether the lender is capable of making on-time payments since it is the sole source of information used to calculate your credit score. With a good credit rating, the higher chances of approval and better loan terms. Simply put, credit reports are used to make many decisions about our financial future.

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In as much as your credit report plays an important role in your finances, it’s paramount that you check it regularly before applying for any loans or even credit cards. It’s worth getting a copy of your credit report once a year. There are several ways on how you can acquire a copy of your credit report - you can do this for free if you can wait 10 days to get it. Furthermore, you can get a copy online using various credit report agencies.

With this, it’s crucial that you understand the reasons why you need to accomplish a copy. Here are other essential things that make your credit report important.

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Protection From Fraud Or Identity Theft

Illustration for article titled Smart Loan Tips: The Importance of Credit Report Uncovered
Image: Pixabay
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A credit report contains personal information and your credit history which includes all the transactions that you’ve had, particularly the loans you’ve taken. It also contains credit card transaction history. Now, when you have a copy of your credit report, check whether there are any transactions that you did not authorize. On the personal information section, check the names and addresses that you are not familiar with - it’s essential. When you see this or any other unauthorized credit, immediately report to the credit bureaus or credit reporting agencies.

To Gain Insight Of What Your Lenders Will See

Curious about what the lenders might see in your report? Then, go ahead and get a copy of your credit report. It’s important that you are aware of what is in your report before the lender requests it, especially when you are applying for a loan. If you are not impressed with what you see, then, you can work on it first prior to filing for a loan application.

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Guarantee All Information Is Correct

Illustration for article titled Smart Loan Tips: The Importance of Credit Report Uncovered
Image: Photo by Oleg Magni from Pexels
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Probably, this is the most important part of checking a credit report. Remember, your lenders will see all the information and it’s crucial that all the information is correct. Just imagine if there is an error in your credit history and your loan application will be rejected. Sounds disappointing, right? Thus, it’s essential that you review all the data and dispute any errors found. Certainly, you don’t want an error to prevent you from getting the best rate on a car loan, home loan, or credit card.

Fix Credit Rating

An error or inaccuracy in your credit report can create a negative impact on your credit score. Thus, checking your credit report is of the utmost importance. It is an excellent way to ensure that your accounts have been properly recorded on your report. If you always pay on time you should not see late payments on your report. Any error or inaccuracy should be reported to the credit bureau and you must file for a dispute to fix your credit rating.

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Conclusion

Applying for a loan, mortgage or credit card means that you give lenders the permission to check your credit history. Just make sure that you have reviewed it first before them so that you can immediately take actions if there are any errors or inaccuracies. Keep in mind that fixing your credit score is an excellent way to boost your chances of getting approved. Again, if you see mistakes or suspicious activity in your credit report, then it’s wise to report them to both the credit bureau and the company that reported the information.

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