Banks require a lot of paperwork to lend you money, and once you've got money, they can take it away. If you don't have enough money in your account, your credit is ruined forever. That's a very real threat.
It doesn't just affect borrowers. If you've got a debt, you could lose your home to foreclosure, your car to repossession, or you could even have to close a business. Some people have to sell their homes when they become seriously ill, and there are times when they can't keep up with the mortgage.
How Can You Fight Back?
1. Read Your Credit Report
You're probably familiar with the annual credit report, and the major categories it can show you. You may be surprised, though, to see that most of the important information is still on there. That's right: The credit reports won't tell you that your employer just stopped paying you, that a loan with a balloon payment has fallen due, or that a credit card company is making you pay a higher interest rate like you would with a refinanced mortgage. However, they can tell you about problems, like late payments or a bankruptcy filing. Read your credit report to see if there are any mistakes that may indicate a pattern of problems. Look for questions like, "Have you made a payment in your account late?" or, "Did you go to court to resolve a dispute with a creditor?" if you are struggling with debt. If you think the information is misleading, contact the consumer reporting company that has done the credit check.
The FICO score is a credit score used by lenders to help determine your creditworthiness. If you are not able to see your credit report in a timely fashion, it can affect your credit score. If your score is not in the "excellent" range, it can raise your chance of getting a high-interest loan. For more information on how the FICO score is calculated, see this guide by the Consumer Federation of America.
Read a Credit Report Checker's Statement of Privacy
More Ways to Improve Your Credit Score
The FICO Score is not the end of your credit score. It is just one tool in your credit score toolkit. The "five Cs" of credit scoring are:
Comparable, Consistency, Clarity, Consistency, and Circumstance.
Consistency is your ability to pay off the same amount of debt over time, even if it does vary depending on how you repay it. Clarity is the accuracy of your credit report. Consistency means that you can get a good credit score with just one good report even though now there are no credit check loans online you can apply to, it doesn't mean you don't need to work on your credit score regardless. Consistency, according to experts, requires that you have a good credit report for five years, have a low average credit utilization rate (the amount of credit you are using that is lower than your ability to repay it), have good payments, and a solid payment history. Clarity means that the credit bureau has reviewed the information on your credit report, and you are included in the credit system. Consistency is a positive sign that you will be able to keep your credit from getting in the way of making and paying other important financial transactions, like buying a car or mortgage. In our discussion on how to make a payment, we'll look at the differences between what a good credit report means and what it does not mean.
How to Make a Payment
Your first step is to research what a payment should look like.