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If you have never read your credit report it can be a little difficult to understand at first glance but the good news is that your credit report gives you all the information you need to strengthen your credit, where you need to work on your credit, and exactly where you stand with your credit history. Understanding your credit history is particularly important when applying for larger loans, bigger credit lines, or when you want to purchase a big-ticket item on credit. For example, say that you want to buy a house, which requires you taking out a mortgage, making monthly payments and keeping up to date on your bills, understanding ahead of time if your credit is good or if you need a little work on it will help you take this step in obtaining a loan much easier.
Start looking over your credit report to ensure that your name, address, employer and your social security number are all correct. This is the first step in keeping your file correct. Your credit report will also include any names that you have used in the past, your maiden name, as well as where you have lived in the last three to five years. Each account that you have obtained under different names will be listed on your credit report under your social security number.
As you review your credit card, you will notice the different addresses you have lived at. if you have had several addresses in just a short time this could be a key reason why you haven't been able to obtain a credit card or a large loan recently. Financial institutions want to be able to contact you in regards to your account, when they feel that you haven't stabilized your life yet and settled down into a home. Living at one address for at least a year will help you get a loan.
Reading through the listings on your credit history you will find all the listings will include any loans and credit cards that you have carried and possibly even accounts that have been closed by you or the financial institution where you had obtained the credit card or loan through.
Under these listings, you will see your account numbers, the amount of the loan that you had taken out or the high limits that you were allowed to use on a credit card. This is important information for another financial institution to see because they will know that you have had the opportunity to get money else where for this amount as well. Beside the credit limit amount you will also see what your high balances have been. For example, if you had a two thousand dollar credit limit but you have never charged more than five hundred dollars to this account this will tell the financial institution that is reviewing your credit history that you are very careful with your money and you are responsible with your credit lines.
Look at the credit report a little closer and you will notice if you have ever been reported as paying late, if you have ever been late, how long your payments were over due (such as thirty days past due, ninety days and etc), if you have any accounts which are currently past due you need to bring these accounts up to date by making a payment on the account and then requesting them to update your credit history to reflect that you are up to date on your payments.
When you want to take out a larger loan, it is important to find out what your credit report says about you before applying for the loan. Do this so you can take advantage of the time you have to fix any late payments, errors on your credit report and to open a few smaller accounts. If you do not have any credit history it would be wise to open a few smaller accounts in the process of building credit before applying for a larger loan.
Building your credit is a life long process and reviewing your credit report at least once a year will ensure that your credit report reflects each loan and credit card accurately. Reviewing your credit also keeps you on top of any problems with identity theft or accounts opened in your name without your knowledge.
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