When you sign up for nonprofit credit counseling, you might think that the details on your credit report don’t matter for the time being. If you’re deep in debt, it will probably be a long while before you apply for another loan or credit card. But, understanding what’s on your credit report is helpful in other ways.
You can order a free copy of your credit report every year from AnnualCreditReport.com. Bringing a copy of your report to a nonprofit credit counseling session can help you and your counselor put together a plan to get your financial life on track.
Gives You the Full Picture
Your credit report gives you the history of all of your loans and the history of your repayments. Knowing what’s on it helps you get in the driver’s seat when it comes to taking charge of your financial life. For example, you might think that you are up to date on your payments and that things are fine, only to be turned down for a new credit card or offered a higher than you expected interest rate on a car loan. If you haven’t checked your credit in some time, it could be that there is a forgotten debt, such as a small, missed payment on a credit card you don’t use anymore, lingering on there.
Credit reports aren’t infallible, and it’s also possible for a mistake to crop up on your report, preventing you from getting the best offers or interfering in other areas of your life. Checking your report often helps you spot any mistakes and take the necessary actions to fix them.
Affects Credit Decisions
Whether you’re applying for a mortgage, car loan, or another type of credit, the lenders use what’s in your report to make their decisions. If your credit report shows a history of missed or frequently late payments, a lender might decide not to lend to you at all. If there’s negative information on your report, you might still be offered credit, but the terms might not be what you had hoped to get. For example, you might have a higher interest rate or need to put more money down up front.
Influences Other Areas of Your Life
Lenders aren’t the only institutions that use the information on your credit report to make decisions about you. As the Federal Reserve Board notes, a number of other organizations can also look at your report and use it to make a decision. If you are looking for a new place to rent, a landlord will typically check your credit first and decide to either rent you to you or not. Employers are also known to check credit and can use the information on your report to influence their hiring decision. Other entities that can check your report include insurance companies and utility companies.
Even if you don’t plan on applying for credit ever again in your life, having a strong report still matters. If you’re ready to start working towards a brighter financial future, the credit counseling team at CESI can help. Contact us today to schedule a credit counseling session and to learn more about your debt repayment options.
