Managing your credit

Credit scores can be the scarlet letter or golden halo
It pays to check your credit report
To obtain a copy of your credit report:

By: Harry E. Robson

Credit scores can be the scarlet letter or golden halo

Credit scores can be the scarlet letter or golden halo that follows you around from the day you get a credit card to the day you send in your last mortgage payment, largely because these scores affect an overwhelming number of today's lending decisions.

When determining how high a score will be, five characteristics separate the cream of the crop from everyone else. In descending order, they are:

1. Past delinquency. People who have failed to make payments in the past tend to do the same in the future.
2. The way credit has been used. Someone maxed out or close to the limit on a credit card is considered a greater risk than someone who doesn't look at the high credit line as a license to print money.
3. The age of the credit file. Fair, Isaac's model assumes people who have had credit for a long time are less risky.
4. The number of times a person asks for credit. The systems frown upon those who have initiated several requests for credit cards, loans or other debt instruments over a short period of time. When the companies you apply to check your report they can find out who else has been checking your report and determine what, when and how you have been applying for credit. That means if you have been getting turned down and are desperately applying for credit all over town your potential creditors will know.
5. A customer's mix of credit. Someone with only a secured credit card is generally riskier than someone who has a combination of installment and revolving loans. (On installment loans, a person borrows money once and makes fixed payments until the balance is gone, while revolving borrowers make regular payments, each of which frees up more money to access.)

it pays to check your credit report

Before shopping for a new home, car or credit card, it pays to check your credit report and make sure it's accurate and up-to-date. If you spot any errors or old problems, correcting your credit report can be lengthy, but worthwhile, effort. If your credit just isn't up to snuff, there are steps you can take to strengthen your credit profile. Finally, there are lenders for folks with less-than-perfect credit.

To obtain a copy of your credit report:

1. Call the number of the proper credit bureau and follow their directions.
2. Make certain you request the copy in writing, and send it certified mail, return receipt.
3. Include your full name, date of birth, current and former address, Social Security number, your spouse's name and your phone number.
4. Each person requesting the report should sign the request

Any error that you find must be investigated by the credit bureau with the creditor who supplied the data. The bureau will remove from your credit report any errors a creditor admits are there. If you disagree with the findings, you can file a short statement in your record giving your side of the story. Future reports to creditors must include this statement or a summary of it.

Creditors in any situation look for indications that the prospective borrower is a good credit risk -- a person who will pay back his or her debts in a timely fashion. Obviously, a history of on-time payments demonstrates that you are just such a person.

But that doesn't mean your credit history must be perfect for you to qualify -- few people's are, after all. So-called 'good' credit can include a few minor dings in your report. Compiled with the help of bankrate.com

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