Lending money to someone is always enveloped with the fear whether the borrower will repay it on time or not. Imagine, you’ve a friend and he is in need of Rs. 15000 urgently, you being his childhood friend on the the basis of trust hand over the money without thinking further. Days become months, months become years and yet you see no signs of him nor your money. Banks face the same dilemma and knowing each customer personally is difficult. This is where Credit reporting agencies come into play.
Understanding and building a better credit report – What steps to take
Credit reporting agencies create a detailed account of all your debts, loans and note every financial transaction you make and rate you of your credit worthiness. A better score immediately signals the lender that the person is genuine and can repay his/her debts in time. So, maintaining a nice track record in the credit report is what makes your loan pass while your friend who vanished wait all life in vain with no positive outcome.
Your credit report will contain information of where you stay, whether you’ve been arrested or sued or the way in which you pay your bills. The credit reporting agencies usually sell this information to the employers, creditors and insurers who in turn use this information when you apply for insurance policies and credit employments.
Why is it important to build a better credit report?
Today, the entire lending industry is dependent on the credit score of a borrower and there lies the importance of building a better credit report. Your credit report contains enough information on the kind of borrower you are and how good you are at managing your personal finances. If you can show a good credit score, this will mean that you’ve been good at managing your personal finances and you can repay your loans in time.
What are the ways in which you can improve your credit score?
When you want to grab a loan at an affordable rate, you should concentrate on improving your credit score so that the lender deems you to be a credit worthy borrower. If you’re unaware of the steps through which you can boost your credit score, here are some of them:
- Pull out a copy of your credit report: The first task that you can do is to pull out a copy of your credit report from any of the credit reporting agencies like CIBIL, Experian, Equifax, etc. You’re supposed to get a copy of your report from these agencies and unless you take out one, you can’t review it or locate the errors that are dropping down the score.
- Locate the errors: The next job that you have to do is to locate the errors that are reducing your score. You should mark the errors in red so that you remember each one of them while you send back the rectified copy to the credit bureau.
- Dispute them: You should dispute every single error to get them erased from your credit report. When you have your report ready with the errors marked in red, you should send back the copy and wait for them to reply back.
- Repay your debts: Repaying your credit card debt can be a good way of boosting your credit score. Make sure all your unsecured high interest debts are cleared as this is the best way to get back on the right financial track.
Therefore, when you want to ensure getting a loan within your means, you need to take the best credit repair steps so that you can improve your score and boost your credit report information.