Credit rating is the most important thing that banks look at when you apply for different types of loans like a car loan, house loan and personal loan. Credit rating plays an important role in the approval of the loan irrespective of the loan you are taking because it is an indication to the lender about your credit behaviour. You can get credit reports from credit rating agencies to know if your credit rating is reported right. Any errors in the report could take months or years to rectify. It is important to rectify your credit report.
How to Protect Your Credit Rating?
Get a free report
Your credit behaviour is reported to credit agencies by the bank from time to time. These credit reporting agencies provide you with the credit report for free of cost. You should never pay money to get the credit report. All you need to do is ensure that you are fetching the credit report from authorised credit reporting agency. There are some online sites that embedded tool to provide free credit reports based on the key information provided by you. To can even use these tools to check your credit report from time to time. It is advisable to check your credit reports at least once a year to ensure that it is reported rights and there are no delays in the approval of the loan when you need them.
How does this credit report work?
If there is a delay in the repayment of the loan beyond 14 days of due date, then it is reported as a black mark on your credit report and impact your further loan approvals. The credit reports present payment history and information covering the details of a car loan, home loan, personal loan, other types of credit you have obtained from the banks. Late payments of utility bills and phone bills will be reflected in the credit report only when they are delayed by 60 days. Make sure you make the payments on time to protect your credit rating.
What information affects your credit rating?
Most of us know that delays in the repayment of the loan, loan defaults will affect the credit rating. how long does this information last on the credit report? The information about bankruptcy affects your credit report for the period of 5 years. default in the payment of utility bills and credit cards affects your rating for 5 years too. If your payments are delayed by 14 days, it reflects in the report for 2 years.
Fix the mistakes
There are good chances that your credit rating is reported wrongly. To avoid such mistakes that delay your loan approval, you should check your report once a year and report any mistakes the credit rating agencies. The reporting agency will take the necessary action to correct the mistake and give a written consent once the error is fixed.