Checking On Your Credit Report So You Will ?Cap?

Posted by Nick Niesen on October 29th, 2010

You may want to consider doing a thorough check on your credit report if you haven?t done it for a while. You might be surprised at how inaccurate and out-of-date many of these reports really are. If you?re like me, though, you assume that everything is okay until you get denied a loan or apply for a credit card that gets turned down. Then, you know something must be wrong and finally take the initiative to investigate the matter.

I finally took the leap and evaluated my own credit report after I was initially declined a loan. I was shocked by the things I found on that report. They listed debts I had paid off over a decade ago and still listed them as being unpaid. I never knew these debts were still on my report and I was furious with the companies that were happy to take my money but didn?t bother to update my records, making my credit report look bad.

I discovered that, even though I had made payments on time and the debts were clear, these parts of my report were ruining my chances of getting the loan I wanted because it looked as though I still had longstanding unpaid debts. The loan companies use my credit report to evaluate my application and to determine my ability to pay back a loan. This is called the ?customer?s cap?, by the way. The word ?cap? means ?capacity to pay?.

I used to be a loan officer once, so I should know the importance of having accurate information on an individual?s credit report. As a loan officer, I would look at the applicant?s report and make some calculations to see what the person?s ?cap? was. From that, we knew who were the most likely to be able to make payments on the loan we were offering them and who weren?t. Loans were granted and denied on the basis of the individual?s ?cap? and their credit report. I hated telling people they couldn?t qualify for a loan but, business was business, and we really had to do it.

The math involved in granting a loan is complex, but basically, if we decide a person?s debt is higher than his or her income, he or she won?t ?cap?. This means that the person just won?t get the loan they are looking for. The loan officer needs to make these determinations so that the loan company won?t end up making a bad decision and so that the customer won?t be overtaxed by loans they can?t afford.

In my case, the credit report showed that I may have problems making payments on the loan I was interested in because I still had these outdated balances showing up as obligations. After a few tense phone calls, I was able to fix my credit report and, in spite of the hassle, I got the loan I was looking for.