From Fortune 500 companies to the average Joe, the majority of the population uses credit. A lender, such as a credit card company, can determine your credit history by either getting your credit score or a credit report.
It is possible to live like 50 million other Americans, only using cash for money transactions. But some big ticket purchases may require credit, such as higher education, a home and a car.
Before you apply for a credit card, make sure you are not a victim of identity theft. Do this by contacting all credit report agencies to make sure you don't have a open file with them.
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It is recommended that you check your credit rating once a year, and scan the document for any errors.
People that have no credit rating are at risk of identity theft, such as children and adolescents. In 2008, 20,000 children and adolescents had their identities stolen.
Your checking and savings account information is typically requested when you apply for credit. By opening a bank account, you can demonstrate financial responsibility to credit lenders.
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It's important that your bank accounts don't go in the red, such as a bounced check. This information does make it onto your credit report and it can affect your credit rating.
The most popular credit score is a three-digit number called the FICO score, which is produced by Fair Isaac Credit Services.
Most credit reports do not include your bill payments. The FICO expansion score, however, provides lenders with information regarding your due-diligence in paying your bills on time.
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There are several benefits to having a co-signer, especially when you don't have credit of your own. Keep in mind, however, your co-signer's credit is equally as tarnished if you don't make timely payments.
A secured credit card is a great way to build credit. A secured credit card has collateral in an associated bank account and your credit limit equals the amount of collateral that you have in this account.
After using a secured credit card successfully for 12 to 18 months, most secured credit card lenders will allow you to hold an unsecured credit card.
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Try not to keep a balance on a secured credit card to avoid paying high interest rates and fees. Also, make sure the secured credit card company reports to all credit agencies, so that you can improve your credit rating with all three agencies.
Every time you apply for credit, a credit report is generated. If you apply for too many retail credit cards in a short period of time then too many credit reports will be generated, which will ultimately lower your credit rating.
To maintain a good credit rating, you must, at the very least, pay your monthly minimum payment on time. It's even better if you can pay the total amount owed from month to month.
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You can further tarnish your credit rating if you keep a balance over 30 percent of your credit limit. So, if your credit limit is $1,000, your outstanding balance should not go over $300.
Installment credit involves paying off a loan in set installments, such as in a student loan, mortgage or car loan.
Lenders want to see that you can keep a job and that your salary is slowly going up. This shows lenders that you are in a good position to use credit.
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Your salary history is a very important factor when determining your suitability for a mortgage. When applying for a mortgage, you will likely have to provide proof of your salary history through pay stubs and income tax forms.