Free Credit Report

Why is it that so much of importance is given to credit rating of a person? Many people are not even aware of their credit rating, till the time they have to approach the bank or a lender for a loan. A person with a good credit rating stands to benefit in the sense that they can avail loan facility with minimum interest rate as compared to a person who does not have a good credit rating. This could add a few extra dollars to your bank account, since you would have saved a considerable amount of money by saving this extra amount, which you would have otherwise paid to the bank or the lender. It is noted that lenders, banks and financial institutions respect you based on your credit rating. In case a person has a reasonably good credit rating, he is definitely preferred and valued above customers with a low credit rating. Now how is this achieved? People with a reasonably good credit rating are the ones, who would not have deferred payments, have taken care of their finances pretty well, have not defaulted vendors and clients etc.

Credit report and how you can have it?

A credit report is basically similar to that of a balance sheet. It gives a brief idea about your assets and liabilities. The assets imply the cash balance, the value of your property, land etc. The liabilities include the amount you owe your debtors, loan amounts to be disbursed. There are bureaus which generate these reports so as to enable you to have a fair understanding of your credit standing.

Some of the bureaus connected with these services are Experian, Equifax and transunion. These bureaus normally send reports at least twice a year enabling you to know about the credit worthiness.

FICO score:

Now how does one arrive at the FICO score? A FICO score enables a lender to understand your credit worthiness. It gives him an idea about your ability in disbursing the loan amount. FICO score normally ranges from 300 to 850 score. The higher your score is, the better is your credit worthiness. The better are the chances for you for the future. This FICO score does not appear in your credit report. You need to shell out some money to any of the 3 bureaus mentioned above. They would go through your reports and enable you to find out the FICO score. In case you do not find out your FICO score, your lender would ensure that he find out your score, before sanctioning your loan.

Your FICO score also decides the interest rate. Let us take for example Mr.A’s FICO score is 700 pts and Mr.B’s FICO score is 850 pts, assuming both of them are sanctioned the loan, the interest charged for Mr. A would be greater than the interest charged for Mr.B. This is because Mr.B has a superb FICO score.

FICO score is the deciding factor not only for the loan amount but also the interest charged on that loan.

What’s next once you have got your credit report?

Ensure that your credit report is absolutely free of errors. There could be entries in your credit report which would state incorrect facts like defaulted payments, late loan installments. Ensure that you set everything right. There could also be mention of credit cards, which are not owned by you. Ensure that your credit report is as transparent as it can be to ensure your credit rating.

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