Your credit profile

Credit is highly personal because it's a reflection of you. Your credit profile doesn't make you good or bad person, but it does make you a good or bad credit risk. It's a snapshot of both financial and personal integrity because offering credit is an expression of trust in you to repay as agreed. Remember, though: Lenders want to extend you credit because that's how they make money. They'll change their "yes" to "no" only if they consider you too risky. In most cases, you present yourself using two documents.

The application
You fill this out to ask for credit. Lenders typically assess these criteria:

1. Character. Part of trusting that you'll repay what you borrow depends on your stability as a person and an income-earner. For example, someone who often changes homes or jobs may have a less settled, less reliable personality-or may be hard to find should the lender have problems with repayment. These are two of the reasons you're asked to list all your addresses and employers over the past three to five years.

2. Ability to repay. In a nutshell, can you afford to repay what you borrow? Your job history provides insights into your earning potential, including how much you've earned, whether there's been a steady increase, and of course, the amount you're currently earning.

Your assets also yield insight,. Do you own a home (which also speik to your stability)? Do you have investment (which shows you can save money)?

Finally, there's the load you're already carrying or could carry: What debts do you currently owe? And how much credit is already available to you (through cards and other lines of credit)? In other words, are you now, or could you possibly ever become, overextended?

The credit report
This report verifies the truth of what you put on your application and presents your actions and attitudes toward credit (your "creditworthiness"). It lists the amount of credit that has been made available to you and details your borrowing and repaying habits. In other words, it shows how you treat credit and your relationships with creditors.

What's not in a report. There's nothing about race, religion, sexual preference, medical history, criminal records, or political preferences.

Each report contains:
Personal information. Your full name, nicknames, current and previous addresses, employers, birth date, and social security number.

Matters of public record. Any relevant court records, such as legal judgments, tax liens, bankruptcies, or overdue child support.

Credit history. A snapshot of your past actions. How faithfully have you repaid other creditors? The report lists all loans and credit lines in your name from recent years. Reports vary from bureau to bureau, but generally they show the type of loan, the date you began the loan or opened the credit line, the amount of the loan or credit limit, the amount you still owe, and your payment pattern. For example, the report may list the number of times you've paid late, including the times you were more than 30, 6o, and go days late.

Inquiries. A list of who has received a report within the past two years (by law, though, a bureau is only required to show inquiries made within the past six months). It's common for a potential lender to turn you down because of "excessive inquiries." Right or wrong, the thinking is that many inquiries could indicate that you're asking many lenders for credit-a situation that could lead to you becoming overextended (and unable to repay the lender reviewing your report).