Shopping on line can be easy, simple and save you lots of money. It can also take a lot of your time, frustrate you, and result in unwanted purchases. Now the same can be said for regular high street shopping, but with the vast opportunity presented by the Internet it will pay you to spend a few minutes reading this and understanding how to better optimize your Credit History shopping experience:
1. Compare - without doubt the biggest advantage that the Credit History offers shoppers today is the ability to compare thousands of Credit History at a time. This is a great thing, but not necessarily all the time! Too much can be daunting at times so take advantage of the great comparison sites and where possible let them do the hard work for you.
2. Research - if it has been said it will be on the internet. Ignorance is no longer a justifiable reason for buying the wrong thing. Take the time to research in detail everything that you could possible want to know about
3. Testimonials - don't know anybody that has bought a Credit History? Wrong! If the Credit History is good the internet will let you know. Use the Internet as a friend and get testimonials before you buy.
4. Questions - Got a question about Credit History then search the Forums, FAQ's, Blogs etc. Don't be afraid to ask .....
5. Reputation - Never heard of the company selling Credit History? Don't worry, no reason why you should know every company in the world, but you know someone that does! Use the internet to find out what people are saying about Credit History and build up a picture of their reputation for sales, returns, customer service, delivery etc.
6. Returns - still worried that even after all of the above your Credit History wont be what you want? Check out the returns policy. There is so much competition now that someone, somewhere is bound to offer the terms that you are comfortable with.
7. Feedback - happy with your Credit History then let people know, after all you are depending on others people input in your buying decision, so why not give a little back.
8. Security - check for the yellow padlock on the Credit History site before you buy, and the s after http:/ /i.e. https:// = a secure site
9. Contact - got a question about Credit History, or want to leave a comment then check out the sites contact page. Reputable companies have them and respond.
10. Payment - ready to pay for your Credit History, then use your credit card or PayPal! Be aware of companies that don't accept them, there may be genuine reasons but given the huge amount of choice you have when buying online there is no reason at all not to buy via credit card or PayPal.
This article deals with the general concept of the term credit history, for detailed information about the same topic in the United States see Credit score (United States).
Credit history or
credit report is, in many countries, a record of an individual's or company's past borrowing and repaying, including information about late payments and
bankruptcy. The term "
credit reputation" can either be used synonymous to
credit history or to
credit score.
When a customer fills out an application for credit from a
bank, store or
credit card company, their information is forwarded to a credit bureau, along with constant updates on the status of their credit accounts, address or any other changes you may have made since the last time they applied for any credit.
This information is used by lenders such as credit card companies to determine an individual's or entity's credit worthiness; that is, determining an individual's or entity's means and willingness to repay an indebtedness. This helps determine whether to extend credit, and on what terms. With the adoption of risk-based pricing on almost all lending in the
financial services industry, this report has become even more important since it is usually the sole element used to choose the
annual percentage rate (APR).
How credit rating is determined
Credit ratings are determined differently in each country, but the factors are similar, and may include:
- Payment record - a record of bills being overdue will lower the credit rating.
- Control of debt - Lenders want to see that borrowers are not living beyond their means. Experts estimate that non-mortgage credit payments each month should not exceed more than 15 percent of the borrower's after tax income.
- Signs of responsibility and stability - Lenders perceive things such as longevity in the borrower's home and job (at least two years) as signs of stability. Having a respected profession can improve a credit rating.
- Re-Aging - Through re-aging, a credit history is re-written and you are given a fresh start on that particular account. This can dramatically improve the credit score. In 2000 the Federal Financial Institutions Examination Council (FFEIC) clarified guidelines on re-aging accounts for delinquent borrowers. (PDF)
- Credit inquiries – An inquiry is a notation on a credit history file. There are several kinds of notations that may or may not have an adverse effect on the credit score. Soft pulls don't affect the credit score and are characteristic of the following examples:
A credit bureau may sell a person's contact information to an advertiser purchasing a list of people with similar characteristics, like homeowners with excellent credit. A creditor can check a person's credit periodically. Or, a
credit counseling agency, with the client's permission, can obtain a client's
credit report with no adverse action. Each of the preceding examples are commonly referred to as a "soft" credit pull.
However "hard" credit inquiries are made by lenders. Lenders, when granted a permissible purpose by a borrower for the purposes of extending his credit, can check his credit history. Hard inquiries from lenders directly affect the borrower's credit score. Keeping credit inquiries to a minimum can help a person's credit rating. A
lender may perceive many inquiries on a person's report as a signal that the person is looking for
loans and will possibly consider that person a poor credit risk.
- Credit cards that are not used - Although it is believed that having too many credit cards can have an adverse effect on a credit score, closing these lines of credit will not improve your score. The credit rating formula looks at the difference between the amount of credit a person has and the amount being used, so closing one or more accounts will reduce your total available credit. And the lower the percentage of available credit, the more the credit score will drop. The credit formula also factors in the length of time credit accounts have been open, so closing an account with several years of history is another avoidable credit mistake.
Understanding credit reports and scores
The Government of Canada offers a free publication called
Understanding Your Credit Report and Credit Score. This publication provides sample credit report and credit score documents with explanations of the notations and codes that are used. It also contains general information on how to build or improve credit history, and how to check for signs that identity theft has occurred. The publication is available online at http://www.fcac.gc.ca, the site of the
Financial Consumer Agency of Canada. Paper copies can also be ordered at no charge for residents of Canada.
International issues
Credit history is typically local to one country. Even within the same credit card network information is not shared for different countries. For example, a person who has been using Visa credit cards issued by banks in China or Canada for many years who moves to the United States and immediately applies for a Visa will not be approved because of lack of credit history.
An immigrant must establish a credit history from scratch in the new country, which can take years. New immigrants are forced to seek loans from irregular channels, which can create social problems.
Bibliography
On the history and origins of credit reporting, see
Born Losers: A History of Failure in America, by Scott A. Sandage (Harvard University Press, 2005), chapters 4-6.
References
- Non Profit UK Credit Reporting educational Video Series
See also
External links
This article deals with the general concept of the term credit history, for detailed information about the same topic in the United States see Credit score (United States).
Credit history or
credit report is, in many countries, a record of an individual's or company's past borrowing and repaying, including information about late payments and
bankruptcy. The term "
credit reputation" can either be used synonymous to
credit history or to
credit score.
When a customer fills out an application for credit from a
bank, store or
credit card company, their information is forwarded to a credit bureau, along with constant updates on the status of their credit accounts, address or any other changes you may have made since the last time they applied for any credit.
This information is used by lenders such as
credit card companies to determine an individual's or entity's credit worthiness; that is, determining an individual's or entity's means and willingness to repay an indebtedness. This helps determine whether to extend credit, and on what terms. With the adoption of
risk-based pricing on almost all lending in the financial services industry, this report has become even more important since it is usually the sole element used to choose the annual percentage rate (APR).
How credit rating is determined
Credit ratings are determined differently in each country, but the factors are similar, and may include:
- Payment record - a record of bills being overdue will lower the credit rating.
- Control of debt - Lenders want to see that borrowers are not living beyond their means. Experts estimate that non-mortgage credit payments each month should not exceed more than 15 percent of the borrower's after tax income.
- Signs of responsibility and stability - Lenders perceive things such as longevity in the borrower's home and job (at least two years) as signs of stability. Having a respected profession can improve a credit rating.
- Re-Aging - Through re-aging, a credit history is re-written and you are given a fresh start on that particular account. This can dramatically improve the credit score. In 2000 the Federal Financial Institutions Examination Council (FFEIC) clarified guidelines on re-aging accounts for delinquent borrowers. (PDF)
- Credit inquiries – An inquiry is a notation on a credit history file. There are several kinds of notations that may or may not have an adverse effect on the credit score. Soft pulls don't affect the credit score and are characteristic of the following examples:
A credit bureau may sell a person's contact information to an
advertiser purchasing a list of people with similar characteristics, like homeowners with excellent credit. A
creditor can check a person's credit periodically. Or, a credit counseling agency, with the client's permission, can obtain a client's
credit report with no adverse action. Each of the preceding examples are commonly referred to as a "soft" credit pull.
However "hard" credit inquiries are made by lenders. Lenders, when granted a permissible purpose by a borrower for the purposes of extending his credit, can check his credit history. Hard inquiries from lenders directly affect the borrower's credit score. Keeping credit inquiries to a minimum can help a person's credit rating. A lender may perceive many inquiries on a person's report as a signal that the person is looking for loans and will possibly consider that person a poor credit risk.
- Credit cards that are not used - Although it is believed that having too many credit cards can have an adverse effect on a credit score, closing these lines of credit will not improve your score. The credit rating formula looks at the difference between the amount of credit a person has and the amount being used, so closing one or more accounts will reduce your total available credit. And the lower the percentage of available credit, the more the credit score will drop. The credit formula also factors in the length of time credit accounts have been open, so closing an account with several years of history is another avoidable credit mistake.
Understanding credit reports and scores
The Government of
Canada offers a free publication called
Understanding Your Credit Report and Credit Score. This publication provides sample credit report and credit score documents with explanations of the notations and codes that are used. It also contains general information on how to build or improve credit history, and how to check for signs that identity theft has occurred. The publication is available online at http://www.fcac.gc.ca, the site of the
Financial Consumer Agency of Canada. Paper copies can also be ordered at no charge for residents of Canada.
International issues
Credit history is typically local to one country. Even within the same credit card network information is not shared for different countries. For example, a person who has been using Visa credit cards issued by banks in China or Canada for many years who moves to the United States and immediately applies for a Visa will not be approved because of lack of credit history.
An immigrant must establish a credit history from scratch in the new country, which can take years. New immigrants are forced to seek loans from irregular channels, which can create social problems.
Bibliography
On the history and origins of credit reporting, see
Born Losers: A History of Failure in America, by Scott A. Sandage (Harvard University Press, 2005), chapters 4-6.
References
- Non Profit UK Credit Reporting educational Video Series
See also
External links
