How to Obtain a Credit Check

Regularly reviewing your credit report enables you to keep your credit rating up-to-date. Obtaining a credit check is easy, but should only be done occasionally. Getting a credit check means applying for a line of credit to see whether creditors deem you credit worthy. Your credit score will drop if you your credit file is checked too often.

Instructions

1

Use an existing credit card issuer to obtain a credit check. As you have a line of credit with them, the credit check will not be registered on your credit file. Too many credit checks can negatively affect your credit score. Log onto your card issuer's website. Enter your user name and password. Check to see if you can apply to increase your credit limit online. Try another card if you can't.

2

Click "Apply to increase credit limit." Obtain your credit check by completing the details requested. Make sure you have a valid reason. Do not request more than a 30 percent increase. Credit card companies usually limit each increase to 30 percent of your existing credit limit. Above this percentage, your request may be declined. This could be recorded on your credit file.

3

Click "Submit." Your details will be verified. Confirm your request. Your card issuer will either confirm that your credit limit has been increased, or refuse the request. If the increase is approved, your credit file is good. If declined, the company will tell you why it decided, based on your credit, to decline you. Alternately, you may also get your free credit history file from AnnualCreditReport.com (see Resources).

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Does Being Denied a Credit Card Hurt Your Credit?

If you apply for a credit card and get turned down, the good news is that the denial itself won't show up on your credit report or hurt your credit score. The bad news is that applying for the card in the first place can actually lower your credit score, though probably not by much. It depends on what else is in your credit history.

Significance

Credit reporting bureaus use complicated formulas that examine your credit history and assign you a number known as a FICO score, named after the Fair Isaac Corp., which developed the system. These scores range from 300 to 850; the higher your score, the more likely you are to be approved for new credit accounts, higher credit limits and lower interest rates. The Consumer Federation of America and Fair Isaac say most people score in the 600s and 700s.

Elements

The FICO score formula takes into account five categories of credit activity and gives different weight to each. According to Fair Isaac, your payment history is the biggest single factor, accounting for about 35 percent of your score. Your recent credit balances, including the portion of your available credit that you're using, make up about 30 percent. The length of your credit history is about 15 percent. The types of credit you use--say, car loans, mortgages and credit cards--account for about 10 percent. The final category is "new credit," which is about 10 percent of your score, and this is the category effected by credit card applications.

Applications

Every time you or anyone else looks at your credit report, it goes on your report as an "inquiry." An application for a credit card--regardless of whether it's approved or denied--triggers an inquiry. If you have a lot of application-related inquiries in a relatively short period of time, that can be a sign that you're in a financial hole, and your credit score may suffer for it. Fair Isaac says that for the average person, each new credit card application can shave about 5 points off a credit score; it may be more or less depending on other information in your history. Inquiries not related to credit applications--such as from an employer for a background check or a company hoping to sell you something--are not considered in the FICO score.

Denials

If your credit card application is approved, the new account shows up on your credit history and will be factored into the other categories that make up your score. If your application is denied, nothing further shows up on your history. The only sign of it is the inquiry.

Time Frame

The time frame that credit bureaus use when determining whether you have an excessive amount of inquiries depends, like so much else, on your overall history. But according to Bankrate.com, inquiries stay on your credit report for a maximum of two years, and only those in the past year can be factored into your credit score.

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How Does Paying Off Credit Cards Affect Your Credit Score

Your credit score and your credit report affect more than how easily you can get a credit card or a mortgage. Employers check the scores of job applicants and insurers check credit scores on their customers. Paying down your credit card bills and keeping them paid off goes a long way toward boosting your score. The specific improvement will vary depending on your payment history and the amount of kind of other debts you have.

Benefits

Paying down or paying off credit cards will have a better effect on your credit than paying off any other debt. Your credit score measures your utilization rate -- how much unused credit you have available -- and that rate gets worse the closer you get to your card limit. Your utilization rate and your total debt add up to 30 percent of your credit score; only your payment history has a bigger impact on your score.

Utilization

It may not be a good idea close your credit accounts once you pay them off. Closing accounts means less available credit, which reduces your utilization rate -- which lowers your score. Credit history counts for 15 percent of your score; if you close a 10 year old account and keep a five year old account, credit bureaus may react as if your history were five years shorter than it really is. If you have several accounts and a lot of history, however, that will affect your score less than if those two accounts were the only debt history you have.

Risks

The financial crunch of the early 21st century makes credit-card companies nervous: Even if you've never missed a payment, your card company still worries you might default. For that reason alone, the company might cut the limit on your card -- reducing your utilization rate -- or jack up the interest rate steeply. The easiest way to avoid this is to pay off your balance every month: A lower credit limit on a card that carries no balance won't hurt your score too much.

Timing

Credit bureaus check your card use at the end of each billing cycle. If you pay off your card each month, then max it out again, bureaus will assume that you're constantly at your credit limit and lower your score. To avoid this, pay off your card online a week or so before the bills go out: That way you'll have nothing on the card when the bureaus check your account.

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What Types of Loans Are Vantage Credit Scores Used For?

The Vantage score is a lesser-known, relatively new (originated in 2006) kind of credit score. It was created by the three main credit bureaus, Experian, Equifax and Transunion, as a way to offer creditors another way to view consumers aside from the more traditional and well-known FICO score. The Vantage score is calculated differently and the scores range from 501-990, which is also a different range than the more common FICO scores.

Uses

Vantage credit scores are not widely known and rarely used. Vantage credit scores have been created as an alternative to FICO scores and so can be used for any type of loan, including credit cards, mortgages, auto loans, store credit cards. However, most creditors do not utilize the option of pulling your Vantage score and prefer to evaluate your application for credit based upon your well-known and wider accepted FICO scores.

Scale

The higher the score and grade, the better credit you have under the Vantage credit scale and the less risk you pose to a creditor.
901 - 990: A
801 - 900: B
701 - 800: C
601 - 700: D
501 - 600: F

Auto Loans

The majority of loans that you can get that use the Vantage credit score fall into the auto loan category because a lot of dealerships like the option of being able to get more people into cars. This is possible because the Vantage Credit score uses a different formula that weighs different categories differently from a FICO score and so someone who may not be approved for an auto loan under their FICO score, may get approved with their Vantage score. Even though the highest percentage of companies that use the Vantage score falls in this category, it does not mean that a lot of auto dealers are using the Vantage score; just that of those who do, they fall into this category more than any other.

Mortgages

Vantage Score claims that three major mortgage lenders use the Vantage score to prove credit worthiness for loans, however the names of these lenders are not available.

Credit Cards

There are no known credit card companies that use Vantage scores to determine your credit worthiness for getting approved. They use one of your FICO scores or a risk score that they have created for you

Store Credit

The only known store card that uses the Vantage score is the department store Kohls, which uses it for all its retail card applications.

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How Does a Credit Bureau Collect Information About Consumers?

Credit Bureaus

Credit bureaus collect consumers information that is reported to them by creditors. Information such as a consumers address, phone number, age, employer, income and payment habits are reported by creditors to credit bureaus. Credit bureaus add the information reported to them to the consumers' credit file. Companies access a consumer's credit file to help determine how much of a credit risk the consumer is. A credit file helps a company predict if a consumer will likely pay debt or not by looking at the consumer's past payment history and employment history. Companies also look at a consumer's credit file to see how many open loans and how much debt the consumer is in. Generally, companies determine that a consumer whohas a high debt ratio compared to their income is a high risk. Consumers that are deemed high risk can have a difficult time obtaining loans.

Information Obtained from Credit Applications

When a consumer applies for credit with a company, the company reports information obtained from the consumer's application to the credit bureaus. A consumer's employer, length of employment, income, address and length of time at address are common pieces of information asked on a credit application that companies report to credit bureaus.

Information Obtained from Loans and Accounts

When a consumer obtains a loan or opens an account with a company, the company reports the amount of the loan as well as payment history. If the consumer is late on payments or defaults on the loan, the company adds a negative report on the consumer's credit file. If the consumer pays the loan payments on time and pays off the loan, the company adds a positive report to the consumer's credit file. Negative reports lower a consumer's credit score and decrease the likelihood of the consumer being able to obtain future loans. Positive reports increase a consumers credit score and increase the likelihood that the consumer will be able to get future loans. Consumers with low credit scores usually pay higher interest rates on loans if they can get a loan at all. Consumers with high credit scores usually can get lower interest rates on loans.

Evictions and Judgements

Court judgments against a consumer for an unpaid debt are reported to credit bureaus, as are court ordered evictions. Landlords usually check a prospective tenant's credit before renting a property. If a prospective tenant has an eviction on his credit file, it may be harder for him to get accepted as a renter. Along with the judgeent and eviction information, the amount of the debt will be listed on the credit file.

Bankruptcy

If a person files bankruptcy, the information is reported to the credit bureaus. The information includes the type of bankruptcy and which debts were included in the bankruptcy proceeding.

Bad Checks and Bank Accounts

Bad checks and bank accounts closed because of a negative balance are reported to check verification services. Check verification services are a type of credit bureau that banks and stores use. Banks use check verification services to help determine if they should offer banking services to a consumer. Consumers who have had their bank accounts closed because of a negative balance or for bounced checks can have a difficult time opening up bank accounts. Many stores will not accept checks from consumers who have a bad check report recorded with the check verifications services that reports

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How Do Collection Agencies Affect Your Credit Rating?

When you fail to make payments to a creditor for debts incurred, the creditors will often transfer this debt to a collection agency. This can have a variety of effects on your credit score.

Debt Transferred to a Collection Agency

Whenever you have debt transferred to a collection agency, your credit score will be adversely affected. This is because 30 percent of your credit score is based on your past payment history.

Reporting Information to the Major Credit Bureaus

If a debt is transferred to a collection agency, both the creditor and the collection agency is likely to file a report with the major credit bureaus. This almost assures that this debt will show up on your credit report.

Will Making Payments to the Collection Agency Improve your Score?

This depends on whether you have a zero or balanced trade line. Making payments on a zero trade line will not improve your credit score, while payments on a balanced trade line will.

Zero and Balanced Trade Lines

A zero trade line means that you no longer have a balance with the creditor. A balanced trade line means that you do have a balance with the creditor.

Decreases With Time

As time passes, the debts passed on to a collection agency will have a smaller effect on your credit score.

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Does Good Credit Help Get You a Job?

Potential employers consider your education, work history, recommendations and interviews. They also often check your credit before making a job offer. Having a good credit score can help you land a job, and having a bad score might cause an employer to offer the position to someone else.

Credit's Effect on Jobs

Your credit history indicates a few things to your employer. First, having an overall good credit score shows that you are responsible with your finances, you are prompt in how you handle bills and you consider the feasibility of purchases before making them. These characteristics can all translate to better job performance. Second, being able to keep up with your bills makes you less likely to be tempted to steal from work or otherwise defraud your employer. Lastly, having good credit suggests that you are on top of your finances and do not have too much financial stress. Being worried about money could lead you to be distracted at work and not as able to perform your job duties.

Checking Your Credit

Checking your credit report before you apply for a job is a good idea. That way, you know what your employer will be seeing in the credit check. If you have not yet gotten your credit report this year, you can get it for free through AnnualCreditReport.com. The federal government also requires the credit bureaus to give you a free copy of your credit report if you are currently unemployed and are planning to look for work in the next 60 days. When you get your credit report, check it for accuracy. If you find any incorrect information, file a dispute with the credit bureau that provided the report so you can correct it before a potential employer sees it.

Improving Your Credit

In addition to fixing errors on your credit report, you can change the way you manage your finances to improve your credit score. One of the best ways to boost your credit is to pay down your credit card balances. Having high balances compared with your credit limits seriously lowers your credit score. Another long-term practice that will improve your credit is to pay your bills on time every month. Even one missed payment will hurt your score, and payments that are more than 30 days late have an even greater effect.

Credit Check Permission

An employer must ask your permission before running a credit check. The employer has to give you a written document that clearly states that the employer plans to check your background, including your credit history. You must sign this document before the employer checks your credit. Employers will usually need your Social Security number to locate your credit report. You should only give your number to an employer who you have met and who you trust is legitimate.

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