Review Your Credit Profile for Better Credit Opportunities

The information in your credit report helps lenders decide how much they will let you borrow and at what interest rate

. It has a significant impact on personal finances, influencing mortgage and credit card interest rates, insurance rates and even employment opportunities.

There is no doubt that potential lenders will check your credit report before they will even consider your credit or loan application. The information in your credit report helps them decide how much they will lend and at what interest rate. The highest credit score will qualify for the best credit deals. Make the best of the situation by reviewing your credit profile and improving it, whenever possible.

A good' credit rating does not require a perfect credit history. In fact, there may be a few minor blips in your report including up to two late (less than 30 days) credit payments or one late installment payment. However, your report should not include any late payments of more than 60 days and absolutely no outstanding public record debts such as judgments or liens. Other things to consider when reviewing your credit profile include:

Timely Payments Pay Off

One of the biggest tip-offs that a prospective borrower is a good credit risk is their ability and willingness to pay back their debts in a timely fashion. Every credit account you carry must be paid on time. A history of on-time payments demonstrates responsible debt management and is a good sign for lenders.

Keeping Overall Debt Low

Another factor that is considered by lenders is the applicant's total debt. It stands to reason that if a large portion of your monthly income is already committed to paying current debts, the ability to repay further debt will be questioned. Non-mortgage debt payments should not exceed 15% of your monthly take home pay. Consider paying down some of your debt before you apply for new credit, if your debt-to-income ratio is too high. (A note about cosigning: If you cosign for another person's loan, the outstanding amount is considered your debt, even though the individual for whom you cosigned is paying all the payments.)

Avoid Too Many Inquiries

When you apply for credit, a mortgage or even a new job, you are authorizing access to your credit report which posts as an inquiry,' which will remain on your report for two years. (Note: Checking your own credit report does not post as an inquiry.) A large number of inquiries', particularly in a short period of time, may be perceived as a need for additional credit due to financial difficulty or even worse, a sign that you've overextended yourself by taking on more debt that you can actually repay. Be careful that you apply for credit responsibly and only when you have the means to repay and the need for additional limits.

Dangers of Excessive Credit Limits

Thousands of dollars in available credit may seem like a positive reflection of your reliability, but too much of a good thing may be seen through a negative lens as the ability to overextend your debt in the future, even if you've never done so in the past. Be choosy when considering additional credit. Consider having the credit limit on accounts you no longer use lowered or close the account. If you close or lower limits, make sure to ask the creditors to note that the account was closed or changed at your request and not because of problems with your payment activity.

Review for Accuracy

Check your credit report bi-annually to make confirm that all the information is correct. Visit AnnualCreditReport.com or call (877) 322-8228 to obtain a free annual credit report from the three nationwide consumer credit reporting agencies: Equifax, Experian and TransUnion. If you find any errors, ask the credit bureau to investigate the disputed information and correct the error.

Review Your Credit Profile for Better Credit Opportunities

By: Noreen Ruth

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