Many people believe that when a company looks at your credit report that company is merely looking to see your credit score and, while this is certainly one thing that they do look at, they are looking at far more. Most especially, they are looking to see how much debt you have compared to your income and even relatively small accounts, such as those with a mail order company, will be considered as an income deduction when considering an application for a loan.
If a lender determines that you have got more money going out than you have coming in then your loan request will undoubtedly be turned down. Actually, the law requires that a certain percentage of your income has got to be available to meet the payments on a loan before the lender is permitted to approve it, whatever the reason for the loan.
Lenders are also looking at your credit history for the last seven years to see how well you have handled loans in existence during that period. In particular, they will look at whether you have made payments on time and will play close attention to any payments that you made more than thirty days late. It might not have appeared especially important to you at the time that you got into difficulty and were late making payments for a few months on an account, but any new lender is certainly going to take this into account when assessing the risk of lending to you now.
A lender will also look to see if any of your accounts have run into debt during the last seven years and whether or not these debts have now been cleared. If you have outstanding payments on an existing agreement credit card companies and other lenders will be very wary when it comes to giving you further credit before these are cleared.
Finally, your personal credit report will show whether you have filed for bankruptcy, usually in the last ten years. Some people believe that a lender is much more likely to advance you credit if you have filed for bankruptcy as they have the protection of knowing that you are not allowed to file again for several years. This however is not true and filing for personal bankruptcy is seen as a red warning flag by the finance and credit card companies showing that you have already shown a tendency to get yourself in over your head when handling your money.
Your personal credit report is a very important document and one which you should not only understand but that you should review from time to time for your own protection. Happily, the law states that you must be furnished with a copy of your personal credit report once a year upon request.
TheDebtAssistanceCenter.com provides information on how to obtain your free annual credit report and answers a wide range of questions such as how can I remove a judgment from my credit report?