Americans are making higher monthly payments towards credit card debts than they should be. Most of us believe that if we're approved for credit or a loan then our credit has to be just fine. Unfortunately, there's a pretty good chance that most of us are wrong.
What Happens to Our Old Debt?
Just because you may have forgotten about a debt you racked up, doesn't mean that the debt collectors have forgotten about you. These creditors and collection agencies could still be reporting these accounts to the credit bureaus. This would absolutely ruin your credit profile and your scores, raising your interest rates even if you are approved.
The surest way to find out is to get a free credit report from each of the three major credit reporting agencies Equifax, TransUnion and Experian. With their combined website at AnnualCreditReport.com, you can get all three in about 15 minutes. You'll quickly be able to tell if there are derogatory or negative accounts that are lowering your credit score.
How Does My Credit Score Affect My Interest Rates?
Your credit scores are the primary factor in whether you're approved or denied for a credit card or even a loan. They're also going to establish where your interest rates will be set. Obviously higher scores will get you lower rates and save you money in interest payments each month.
Imagine if you could spend thousands of dollars less every year just because your credit reports were accurate and all of your debts were paid off. You could start a retirement fund or a nest egg.
Don't Lenders Give Me My Credit Report if I'm Denied for a Loan?
This might be the worst time to find out that a debt on your credit reports is ruining your credit score. You need to make sure that your credit profile is strongest before you apply for a loan. Even one outstanding debt could be the difference between an approval and a denial.
If there's an outstanding debt that's been haunting you, try and settle with the creditor or see ifdebt relief services can do the dirty work of negotiating for you. Very often debt collectors are willing to take less than what you actually owe them as long as they get some of their money back.
Can I Improve My Current Interest Rates?
On the back of every credit card there's a handy customer service number. If you've improved your credit score enough, give them a call and request a reevaluation of your account terms. It might also help if they think you're looking to go with a card with better rates with them or without them.
The faster you take a look at your credit reports, the faster you can start making sure that they're 100% accurate and showing lenders how responsible you've been. You'll be happy you did when you're putting extra money in the bank and not paying off high interest amounts every month.