widgets

panelarrow

Your credit report could be triggering loan rejections

getloanYou submitted your loan application with pomp and glory giving all necessary particulars and without omitting a single detail. In fact, you didn’t miss a trick and you were fairly satisfied with your effort, confident that your request would be approved. Then comes the rejection and all hell breaks loose. Your burning ambition to burn the tarmac with that new car goes up in flames. You may not know it but your credit report just did you in. Here we discuss the most high profile errors that break your credit report. Not keeping hard inquiries to the minimum A hard enquiry occurs when lenders want to check your credit status and ability to pay back the loan, and such inquiries show up in the credit report. Generally speaking, too many hard inquiries indicate the desire to shop for more loans than a person can reasonably handle, and is discouraged by cutting points in the credit score. But FICO makes an exception when, for example, you indulge in rate shopping for a mortgage, say within a period confined to forty five days, then that period is treated as one inquiry. Despite valiant precautions you could trigger a hard inquiry in the following circumstances:
  • When you are hiring a rental card, and use your credit card for the payment.
  • You are buying an expensive and ornate smartphone, and the salesgirl insists on checking your credit score.
  • When you apply for credit limit enhancement and the company does a credit check.
So the basic endeavor should be to keep various circumstances in mind and minimize your hard inquiries to the extent possible so as not to compromise your credit score. Errors in personal identification that you missed out When you order the credit reports from Equifax, Experian and TransUnion, the three main credit reporting honchos, you could be missing out your personal identification section that records every data and personal information – things as simple as name, date of birth, name of the spouse, your contact number, and so on. As your personal data would be handled separately by all three agencies, the possibility can’t be ruled out that the agencies could be storing and perpetuating silly mistakes which are costing you dearly. If it is a major mistake like a misspelt name – Jane Kiley Rosamunde mixed up with Jane Kiley Roosevelt, your report might be interpolating someone else’s identity and rating, and you end up losing points for no fault of yours. Other possible errors are:
  • Date of birth is incorrect.
  • Residential address is incorrect or shows errors in number and name.
  • There’s a phone number mentioned which is not yours.
  • Spouse is indicated when you are single and unmarried.
Low transaction accounts might be closed unrequested getloan2Paying your credit card dues on time is a commendable practice, but requesting closure may not be the best option. FICO assigns 15% of your score to the length of credit balances. The longer you maintain credit history the more it boosts your credit score.  So keeping open a line of credit is more creditable than closing off accounts in a hurry. It’s possible that some accounts may have been closed automatically without your formal request, and the following damage may ensue:
  • Your oldest account gets closed resulting in a drastic shrinking of the average age of your credit lines, thereby impacting your score.
  • Your credit utilization ratio, an important indicator of how effectively or sparingly you manage your fund facilities may shoot up by default, hurting your credit report. This is how it happens; you have two accounts with approved funds ceilings of $1,000 each. The balances are $400 and $250. You inadvertently close the $250 account resulting in your credit utilization zooming up because of the $400 account.
Get back to checking all your credit cards and watch out for rules that say that a minimum balance is essential or a minimum threshold of activity must be observed to avoid closures. Unless you intervene the company might close the account perceiving it to be unutilized or underutilized. You could be owing money to the government in ways you hadn’t realized This is an uncommon but nonetheless serious way of hurting a credit report. For example you collect a speeding ticket or some other traffic violation while on vacation and you forget to pay the fine. Even if you pay the rental agency the government is unlikely to let you go. They could assign the task to a collection agency that will add to the charges and report their lien to your credit reporting agencies. The problem is that the public record will remain in a credit report for up to seven long years, and lenders frown on seeing them.
  • Ensure that your interactions with the government resulting in fines, fee payments and violation tickets are all paid in time, all the time to avoid creating public records.
  • If you intend to move intimate your new address to the U.S. Postal service to avoid a situation where you could miss mail emanating from the government.
  • Thoroughly check your credit report for mention of bankruptcy suits, adverse judgments, lenders’ liens, and any history of convictions that may be appearing by mistake, and if they do, they could be attributed to somebody else.
It’s worth sparing the time and energy to go through your credit report with a fine toothed comb to ascertain whether mistakes and unforeseen errors have chipped away the glamor of your credit score. Even a small error can result in a credit application being rejected, and that would be a catastrophe you could have avoided.