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Why a Credit File is Important

Why a Credit File is Important

A credit file is an important piece of evidence of your creditworthiness.

Why a Credit File is Important

A credit file is an important piece of evidence of your creditworthiness. It says so much about you-your personal information, job history, financial transactions, court days, and so on. That’s why it can either help you get credit or make you lose the best deals. Here are some specific reasons why a credit file is important:

It reveals present and past credits

The credit file contains information about your mortgages, credit cards, and other types of loans. If you have unpaid utility bills and rents and overdue accounts, the credit reporting company will list it there.

It shows the severity of your unpaid debts

How long has it been since you last paid your debt? Whether your overdue accounts are 30 days or 90 days past due, the record will show it. And your potential lenders will have an idea about your financial status and the possibility that you will also default on your payments.

It serves as proof of your credit risk

If you have listings of eviction notices and default judgment, those items will show on your report as well. If you don’t have credit cards but you’re planning to get a mortgage, you can refer to your credit file to know if there is a possibility for you to get competitive mortgage interest rates.

It scores your creditworthiness

When taken together, your credit lines, credit history, types of credit accounts and the total credit you have are important details that credit reporting companies take into account when grading your financial health. How many inquiries did you make within a period of time? Have you used up your credit limit? These are important questions that your credit file can supply your potential lenders or utility providers. By simply looking at your credit file, they will have an idea of your borrowing ability and repayment habits.

Your credit score can seriously ruin your plans of buying a home, taking out business loans or investing for your future. When lenders see your poor credit rating they may decide against your favor when reviewing your applications for mortgage, line of credit, a credit card or some other loan products. If they decide to approve your application, the interest rate that lenders will charge for your credit will be higher than your counterparts with good credit scores. Lenders use your score to get a picture of your credit risk during your application.

Having a bad credit is also stressful. You have to deal with the humiliation of being turned down every time you apply for credit cards or loans. It is also very difficult to look for affordable loan products when you badly need the money to pay for the things you need. That’s why a credit file is important-and not just a credit file, but a clean one. So, why bear with a poor credit rating when you can do something to fix it?

Contact Clean Credit now and get the right answers to your question, “why is credit file important” and possibly enjoy a clean credit report right after!

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