Your credit report is a storyline of your credit life and it is used by potential lenders to determine whether they should provide credit to you. You should be very vigilant of your credit report and maintain it to ensure that a potential future lender will view your financial history favorably, when it comes time to lend you the credit you need.
Look at your credit report as if you were the potential lender, would you lend money to yourself? One of the main stories that your credit file will tell you, is how well you keep to your commitments. This indicator in your credit report is look at by many people who are weighing up on whether they should invest in you. This is usually done by people who have not known you for a long period of time. This could be a potential employer, a future spouse, a landlord and the credit provider. The credit report is a snapshot in time of your past borrowings and repayments, which also provides a window into your life past the standard financial storyline.
A credit score is a numeric indicator on the risk you are in lending money to. If you have a low score you can find it hard to get credit approved and when you do you could be facing high interest rates and additional terms and conditions as additional safeguards to the lender. Usually the lender will want additional insurance taken out on the loan. On the other hand if you have a high score you will find it easier to obtain credit, with lower rates and without additional terms and conditions from the lender.
The most important actions you can do to ensure that you have a good credit score is to not have too much credit at any one time and to make sure you never fall behind on your repayments, that means you make your repayments before the due date and it would be preferable that you are making additional payments, that way you are in credit on your repayment history.
Falling behind in payments is not where you want to be, so do everything possible to make those payments on time, sacrifice something that’s not important or mandatory (like that restaurant meal) and make those payments. If you fall behind and are deemed to be delinquent on your loan this will have a big affect on your credit score and subsequently you will find it hard to get credit in the future.
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