Knowing your credit history key when applying for financing

There are a number of steps involved in acquiring financing.

There are a number of steps involved in acquiring financing. As a routine part of the application process, the lender will order a copy of your credit score.

Your personal credit score is compiled by credit bureaus who collect information from various sources, including banks, retailers and other public records, creating a credit report. Information such as: What credit and debit cards you have, the types of accounts you have at various financial institutions, information about personal loans (such as student loans), are all part of the report.

Generally, credit reports show information going back six to seven years.

The credit bureau does not rate you — it merely provides information on your credit history. The lender will examine the credit report to aid in determining whether to lend you money. If the lender has any concerns about something on the report, the lender may ask you for an explanation.

The lender will also use the report to verify other information on your financing application, for example, information about your employment status, your address (including the name of your landlord and perhaps rental payment history), and so on. The credit report will also indicate inquiries made by other creditors over the period of the report.

By getting a copy of your credit report before you apply for financing, you may be able to avoid surprises and possible delays that may occur in having to answer questions about your credit report. Because the report contains information about you, you have a right to inspect a copy of it.

How to improve your score

Here are a few tips to improve your credit score:

• Apply and open new credit accounts only as necessary.

• Pay off debt rather than moving it around.

• Get copies of your credit report and review to make sure they are accurate.

• Understand how your credit score is determined.

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