What Credit Reports Are Used For

Most of us realize that our credit report is reviewed when we apply for a credit card, mortgage, or car loan. However, it is often forgotten that your credit report is also reviewed when you apply for utility services, car insurance, life insurance, or a cell phone. With bad credit, you will be required to leave large deposits with utility companies. Landlords often use credit reports to decide among rental applicants. A potential employer may even assess an applicant’s credit report before extending a job offer. Your personal credit score is often used when a creditor is deciding whether or not to extend your business credit.

These creditors will also report to the credit bureaus if you do not pay your bill on time. If you decide to change your cell phone company, cable tv provider, internet provider, change your insurance company, or move to a new apartment, make sure you pay your final bill in full. An unpaid bill will most likely get you a COLLECTION ACCOUNT ON YOUR CREDIT REPORT. Imagine what that looks like to a potential employer or to a lender. That’s why it is so important to remember the rules of the game. Even the small forgotten accounts (like unpaid electric bills) are considered fouls that can get you a penalty, and keep you from scoring!

As a side note on insurance...Most people are shocked when they hear that auto insurers use credit scores in the course of deciding whether to cover drivers and what premium they should be charged.

Why should you have to pay a higher rate for your car insurance because you had unpaid bills or some other financial problems? Some customers who had never had an accident or violation were faced with sharply raised premiums when their renewal notices arrived. In fact, auto insurers are passionate in their belief that credit scores are one of the best predictors of future claims. Statistics also show that most insurance fraud stems from individuals with credit/money problems. According to the American Insurance Association, here are some of the kinds of data from credit reports that are of most interest to insurers

1. Amount of outstanding debt

2. Payment history (any late payments?)

3. Bankruptcies

4. Collections

5. Credit history

6. New applications for credit (number of inquiries on your reports)

Offensive Tip: Remember it is a smart play to notify all creditors if you move. Make sure your creditors always have your most recent address so that you'll receive your billing statements promptly. Also fill out a change of address form at the post office. This will ensure you get your mail forwarded even if some of your creditors didn’t get your new address changed correctly. This also includes temporary address changes or PO Boxes.

Expert Credit Consultants, LLC specializes in establishing business credit and funding using the exclusive Business Credit and Finance Suite as well as credit restoration and optimization. www.ExpertCreditConsultants.com.