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It's not a good idea to attempt to make a large credit purchase without knowing what's on your credit report. When you make an application for most types of credit, the creditor will review your credit report to make a decision about extending credit to you. The last thing you want is to be speechless when a creditor or lenders asks about something on your credit report. Before you make certain applications, you should check your credit report and attempt to reconcile any questionable items on the report.
You should get a copy of your credit report from each of the three credit bureaus before you do any of these things:
Lenders take a deeper look at your credit history when you make any of these applications. They want to be sure that you do not pose a significant financial risk to them in the event that they extend credit to you.
What exactly makes a borrower look like a financial risk? One of the first things that will get you turned down for any of the items listed above is a charged-off account within the past two years. It's worse if the charge-off hasn't yet been paid. In most cases, you will not be approved for a loan or credit with a charge-off on your credit report.
Unpaid collections are another blemish that lenders view as unfavorable. While unpaid collections aren't as bad as unpaid charge-offs they can still cause you to be denied for an application. If the collection is inaccurate, you have the right to have it removed from your credit report. To keep from having to give an explanation to the lender, you should have the inaccuracy removed before making your application.
A history of late payments and high balances on accounts are also habits that cause lenders to deem you as a credit risk. Review your credit report to see if either of these items applies to you. If so, get caught up on your payments and bring down your balances to increase the chances of getting your application approved.
Even if you feel fairly certain that your credit report only contains positive information, it is still a good idea to get a copy before making applications in these situations. As the saying goes, "Better safe, than sorry."