The type of credit card user you are and tips on finding your credit history

What kind of credit card user am I?

When you see some jewelry or clothing that you would like to own, do you ask yourself if you want it badly enough to borrow the money and pay interest to have it? When you go out to eat, do you wonder if you want the meal in that restaurant badly enough to borrow the money to eat there? Many people do not think to ask themselves these questions. This can lead to overspending, which forces many to pay interest on the new clothing or meals for many months to come. While you want some interest payments to show up, you want to be in control of the cards - not have the cards be in control of you.

The old way of looking at a credit report was to look for AA beside each item. AA stood for as agreed. As long as you made the minimum payments (or more), you had AA credit. Today, a complicated formula is used to determine your credit score. Paying your credit card off in full each month could give you a lower score than if you pay interest.

Another common abuse of credit is excessive optimism. Do you really believe that you will never get sick or that your car will never break down? Do you have cash put away for such possibilities? Do you realize that the kids need clothes for school in September or that you may spend more money in December for holiday gifts than you will spend at other times of the year? Have you prepared by saving cash, or will you have to charge everything and make monthly payments?

All of these financial planning failures can get to a point where paying bills on time becomes difficult. When an underwriter looks at your credit history, he or she is looking to see if you borrowed money and repaid it in a timely manner. Did you keep your promise to make payments on time? If so, chances are your promise to repay the loan for which you are applying will be kept. If you did not keep past promises, the underwriter must wonder if you will keep future ones.

How do I find my credit history?

Before applying for your loan, get a copy of your credit report. You can obtain a copy directly from a credit bureau or a company that will get you one from all the major credit bureaus. You can find these companies in the phone book under “Credit Reporting Agencies,” or on the Internet by searching for the same key words. You are now entitled to one free credit report from each of the three major credit reporting agencies every year. Before ordering, read the information from the Federal Trade Commission at www.ftc.gov/ bcp/edu/pubs/consumer/credit/cre34.shtm.

If you need to obtain more than your one free report from each agency in a year, the cost for additional reports should be under $40, and even less if you go directly to the credit bureaus. If you have been refused credit based on your credit report, the credit bureau will give you a free report even if you have already gotten your free annual report. You will need the letter showing that you were refused credit. It is wise to get a report from all three bureaus because when you pull your credit history, each report may not contain the same information.

The three major credit reporting companies are Equifax, Experian, and TransUnion.

Examine the report for errors. Perhaps the credit bureau mistakenly put information about someone else on your report. Report any errors to the credit bureau. Get something in writing saying that the incorrect information is being removed, and save it. You can at least show the letter to your prospective lender. You may find that it is not easy to get the mistake removed. It may be temporarily removed and then show up again later. Having something in writing will make it easier to get the error removed a second (or third) time, if necessary. After making sure the information from each credit agency is accurate, you can get a good idea of your position as a borrower by checking one figure on each report - your credit score.

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