12 Dec
How much do you know about your credit status?
Ever wondered how banks or other lenders decide whether to give you credit? Here are few tips that describes how important your credit status is to your finance, business and personal growth.
There are plenty of good reasons why you should know what your current credit status is – knowing what’s in your credit report and the rating of your credit score can not only help you better manage your finances, but it can help you get the credit you want amongst other benefits.
When you apply for credit the process usually involves you giving your permission to the credit provider to check your credit report. The term ‘credit provider’ doesn’t only include banks and credit card companies but also retail companies, leasing companies, landlords, etc. Employers also carry out checks on your credit report during their verification process.
It is important to stay up-date on your credit status as you may have been reported as owing without knowing or you have been reported as missed repayments without realising it.
Bear in mind that different lenders look for different things when looking at your credit report and deciding whether to lend to you. In any case, it makes sense to check your credit status from time to time to make sure there are no mistakes and be sure it's in good shape.
What’s in your credit report?
Your credit report gives you a full detail of all your lenders and the credit transactions you have had with them. It also lists every application for credit you have made recently and shows a record of all the addresses you’ve lived at and provided in the last six years.
When do you check your credit report?
You can check your credit report as often as you like, and it won’t affect your credit report or credit score. However, when you apply for credit and lenders search your credit report, there’s a record of the transaction left on your credit report.
How your does your credit status affect your chances?
Many companies will choose not to lend to you if you haven’t always managed your credit well and portray a bad credit score, while others might lend but charge you a higher interest rate or offer you lesser than the credit you applied for.
A lender doesn’t have to give you the interest rate they are advertising. Some lenders operate on the basis that the rate you get depends on the risk they think you represent of not paying the credit back on time. This is depicted by your current credit status.
Ways you can build your credit history
- Repaying credit agreements on time
- Have some credit, not many – demonstrate that you can borrow/ pay back responsibly
- Be aware of your debt-to-income ratio. Your monthly debt payments should only be a fraction of your monthly income
- Demonstrate stability – don’t jump from job to job or from one business idea to another too frequently
- Always provide consistent data across all credit applications you make.
If you don’t have a perfect credit history, being familiar with the contents of your credit report can help you to improve your credit rating, alerting you to problem areas and highlighting any difficulties you are having managing your credit.
If you spot any mistakes when you check your credit report, you can correct them by disputing the report delivered to you. The credit bureau contacts the relevant lender for resolution accordingly.
Checking to know your credit status regularly is recommended. You are entitled to one free credit status a year and can subscribe to any of the CRC Credit Monitors to stay up-to-date on your credit status. Please visit http://www.crccreditbureau.com/products or call +2348072090622 for more details.
