Confusion With Credit Reports

A lot of us have heard of this thing called a Credit Report. It’s almost one of those words we don’t want to say out loud too often – just in case the Tokoloshe hears us. The problem is credit reports, and our credit status for that matter, is something that affects areas of our lives that matter most – getting a home loan, a personal loan, travelling the world or even paying for that home improvement.

What is your Credit Report?

To put it simply your credit report is the bank’s way of working out whether you are a viable investment for them. It’s how they decide whether or not you are able to afford the loan you have requested from them. Essentially, they want to limit the risk they take when handing out loans to people.

What is MY Credit Status?

That’s the question, isn’t it? Your credit status is something we should all be aware of. Once we know if we have a healthy credit status or an unhealthy one, we can start to understand how it works. The thing about your credit status is that it only takes the raw facts into consideration. It doesn’t care about where you’re from, what age, race or even what your salary is. It simply looks at your debt related information.

How Can I Improve my Credit Report?

Pretty simple really. Ensure you make your payments on time and completely. The moment you let a debt grow, it begins to affect your score. The funny thing is even if you don’t have any debt, your credit score might be super low (and low is bad). One of the simplest ways to grow your credit history is by having a credit card.

Now I’m not saying you go out and spend until you can’t spend any more. Rather, spend a small amount and then pay it off at the end of the month. Keep doing this – it shows you can pay your debts on time. One thing to remember: any late payments can affect your credit report for up to 7 years after the fact.