The credit report

Nowadays, a lot of people finance their homes with mortgages or they pay for their cars with loans. For young people, there is the opportunity to pay the college with loans, and many others make purchases with credit cards. It’s a general tendency of people to borrow money, from banks or other financial institutions to make payments or to purchase various items. If you want to use this method for acquisitions, don’t expect to get credit just as a matter of course. First of all you have to apply for it, and just like you would hesitate to give money to a stranger, bank and finance companies will not grant the credit without knowing who you really are. Credit reports are the papers which tell exactly who the persons who apply for credits are. Banks and all the finance companies rely on credit reports, so you should better know what is in yours.

The credit report presents all your credit activities and it lists any credit card accounts and loans you may have had, their balances and if you make the payments, and how regularly. The credit report also shows if any actions have been taken from someone against you because of unpaid bills or credits. Credit reports information is gathered usually by reporting agencies. Consumer reporting agencies collect information about people’s credit activities and store it in huge databases, and they charge a fee for supplying that information. The most common type of consumer reporting agency is the credit bureau, and there are three major credit bureaus which operate nationwide, but there are also smaller companies which serve local markets. Related to the credit report, the credit rating is drawn from the report and it outlines the borrowing, charging and payment activities. Good ratings help people reach their financial goals, while poor ratings limit their financial opportunities.

The credit report can be provided by credit bureaus only to the following requests: creditors, employers, insurers, government agencies or anyone else with a legitimate business need for the information. The credit report can also be requested by court orders or federal jury subpoenas.

The credit reports usually contain four types of information: identifying information (full name, addresses, SSN, date of birth, employers, similar information about spouse, if applicable), credit information ( the accounts with the banks, retailers, utility companies and other lenders, information which is categorized by type, by opening date, credit limit and payment pattern), public record information ( state and country court records related to bankruptcy, tax or any other monetary judgments) and recent inquiries (those who have obtained copies of the credit report in the last year).

The credit report

The decision where or not to grant your credit is made by the lenders themselves and the credit reporting companies only supply information about your financial history. It is important to see a copy of the credit report before applying for credit like car loans, mortgages and credit cards, to avoid any unwelcome surprises. Errors in credit report are common and you should understand that they are not part of a conspiracy against you. Errors happen because misspellings and human errors happen and in the same time they can be easily corrected. The errors can be corrected by contacting the reporting agency. The situation will be analyzed and sometimes they might ask you for papers to prove the real situation (anyway, this rarely happens, because the errors are corrected with information from the institutions, and you won’t be required to prove anything).

All the information, good or bad, will remain on your credit report for seven years, and if you file for personal bankruptcy, that information will be on the credit reports for 10 years.

You can get a free credit report every 12 months, from each of the consumer credit reporting companies (Equifax, Experian and TransUnion). The free annual credit report can be requested through www.annualcreditreport.com or by contacting the companies by phone or e-mail. In order to process your request the company will need you to provide them specific identification information, and keep in mind that larger bureaus do not share information with each other, so the credit report can be different at each bureau (it is better to get copies from each of them).

The credit report

Per year, you can get three free credit reports, from those three bureaus and it is better to profit of these free credit reports, because the high percentage errors in the reports is good motivation to check all the available opportunities.

More than the credit report, lenders will ask you for the credit score. This is the fastest way to determine if the person applying for a credit is a good risk. Credit score is based on the information in the credit report and it represents your rating. The scale for credit scores has values between 349 and 849 and intervals’ meanings are: below 600-poor credit, 600-650 fair credit, 650-720 good credit and 720-850 best credit. Taking into account that the credit reports are free, you should know that for the credit score you should pay. This happens only if you want the credit score to be calculated only by the bureaus; if you want, you could use one of the online available tools, which could easily help you calculate the value of the credit score. This score can be calculated by summing up the values of the information in the credit report, and you can calculate this easily by using an online guide.

Taking into account that credit reports and the credit score are very important in the process of applying for a credit or for a loan, take care of your financial history and don’t mess up the payments for credits. Check the free credit reports, and pay attention to details, in order to detect possible errors. The credit report is your personal card when in the credit/loan/mortgage environment, so keep it clean for future situations, when you will need it to purchase something. The annual credit report, as I mentioned before, can be provided by three bureaus, so don’t mind sending each of the reporting agencies an e-mail and requesting your personal credit report.