Wednesday, July 29, 2009

Know them- Credir Report, Credit Score and ID Theft

In order to enjoy a good credit life one needs to be aware of certain terms related to the credit world. Those who have just turned 18 and wish to avail of credit cards and start their financial life should be aware of a number of terms related to credit.

Here is a brief description of some terms that matter most in while managing your finances.

Credit report: Your credit report is the most important document of your credit life. Every financial activity is contained in your credit report. Every loan that you make and every mortgage is present in the credit report. Similarly all the purchasing and the details of paying off debts and loans is present in the credit report.

The credit report is a detailed document that is updated with every credit activity you perform. The document is present in the database of the three major credit reporting bureaus, Equifax, Transunion and Experian.

Credit Score: Depending upon the details compiled in your credit report, you are allotted a credit score. The credit score is dynamic and changes with your financial dealings. Late payments have a negative effect on your credit score and cause it to drop. In order to enjoy a good credit score, you need to make sure that you maintain a good credit score in order to enjoy benefits later in your life.

A bad credit score would hamper your financial life in a number of ways. Creditors look at your credit score before accepting your applications for loans and credits. A poor credit score would require you to pay huge interests on the loans you make. On the other hand if you have a good credit score then you would need to may the lowest possible interest rates.

There are a number of things that cause your credit score to dip. You can check out for the same and get help any time.

Identity theft: Identity theft is one of the fastest growing crimes in America. It involves stealing some one's identity and using his or her credit cards thus ruining his credit life. Many people have suffered because they have fallen victims to ID theft. Make sure that you do not provide your personal information to any body over the phone or over the net unless you are completely sure.

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