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ØCredit check
ØCredit checks
are official inquiries into your personal financial behavior,
particularly as it pertains to borrowing and paying back money. The
three major credit reporting bureaus are Equifax, Experian, and
Trans-Union. Each bureau gathers personal financial data and
establishes a credit rating for the individual. The credit rating, or
FICO score, is reported to an inquiring source, usually with the
written permission of the individual. Often all three scores are
averaged for a composite score.
Frequent credit checks,
primarily caused when applying for several credit cards, may actually
cause one's credit score to drop. The credit bureaus will consider
multiple credit checks for mortgage and auto loan applications within a
45-day period as just one inquiry. The bureaus also ignore all credit
checks made within 30 days prior to the day the score is computed.
Credit
checks are no longer limited to loan application forms. Many potential
employers will use a credit check as part of your application process.
Insurance companies may use a credit check to help evaluate your
liability worthiness. Banks may refuse to let you open an account if a
credit check does not meet their standards. A landlord may require a
credit check before renting an apartment to you, or may establish a
higher rent in the event of a poor credit rating. While supporting
statistics and civil rights issues are being explored, these practices
are becoming more common.
Many
student loans do not require credit checks, as is true with many
insured or subsidized private and government loans. But most loan
applications, especially for unsecured loans, rely heavily on credit
checks to establish the size of the loan, its payback length, and its
interest rate.
You
may review your credit report for accuracy at any time. Federal law
allows you to obtain a free copy once a year, but you may have your
bank or lending institution share their report with you. If you live in the U.S.A.
you can obtain your free reports through the only authorized site at
www.annualcreditreport.com or by calling 1-877-322-8228. Study the
report and report any inaccuracies to insure the best possible credit
score.
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