Those who applied for loans or mortgage recently knows that unless their credit history is as clean as glass, it is very hard to borrow any money. Even people with perfect credit scores are being turned down by banks and lending institutions. Banker has tightened lending standards due to two reasons, first being a large number of customer defaults and second because there is simply not enough money out there for banks to borrow.

Free Credit Report

These difficult times call for extreme caution and it is very important to check your credit score regularly and monitor all those transactions that go into your credit reports. we should also take good are that we do not engage in behaviors that that triggers a chain of events that eventually will throw us against higher interest rates, reduced credit limits and eventually non availability of credit. Lower credit scores on credit reports can do exactly that.

Preventive Measures

You should check your credit report and credit scores regularly. Three major credit rating agencies called credit bureaus are EquiFax, Experian and TransUnion. All of them track individual’s credit history and compile detailed credit reports that reflect great deal about your credit behavior. Each of them have a separate formulae (a very secret one) to calculate a three digit number called credit score. these credit scores and detailed credit report help lending institutions and banks to decide the level of credit risk they indulge there self in before they lend you any money.

Employers and landlords sometimes also use this information before hiring any employee or signing a  lease respectively.

It is quite important to know exactly what information is there in your credit reports as to err is human and despite all the technology your credit reports can contain errors, omissions and transactions that never happened. Fraudulent activity can also get detected in time if you scan your credit reports regularly.

VISA did a survey with its cardholders that revealed:

Nearly half credit card holders said they check their score once a year or more and 18 percent every few years. But alarmingly, 30 percent have never checked their credit score. That’s the financial equivalent of driving with your eyes shut.

Very few people know that they are entitled to order one free credit report per year from each bureau as mandated by an act that Congress passed in 2003. The only authorized site for that is

A credit score is not merely a measure of  you bill payment history. this is  great misconception. It also indicates the level of debt burden you have. the kind of interest rates you are paying. It has nothing to do with your race, gender or nationality as most people think.

There are 5 factors that are vital to your credit score:

  1. Payment history.
  2. Total Amount owed.
  3. Length of credit history.
  4. Total Number of opened credit accounts.
  5. Types of credit being used.

Both positive and negative information in each category is weighed in each category. they weight given to each factor varies from case to case.

It is very important to go through your daily mail. among the pile of junk and pre-approved credit card applications. There is very important information from lenders that you can skip. Lenders can change account terms, interest rates credit limits and payment deadlines. So please read your mail daily or at least weekly.

Some More Tips

Pay  your bills on time every time.

Never miss a payment,least you can do is to pay the minimum amount due on credit cards and other loans.

If you can’t make a payment for any reason, don’t hide, be open about it and contact your lender to see what can be done.

Use between 30 – 40% of your available credit lines.

Don’t open and close too many accounts in a short period.

Missed Medical and Insurance payment are also reported in your Credit Report so they are also important.

In the nutshell, It is very important to know your credit score an check your credit report. And there is no reason not to check your credit history when you can get free credit report.

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Rana Mansoor Akbar Khan

Rana Mansoor Akbar Khan

Financial Blogger. Tech Journalist. Freelance web developer.


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