|
If you put in “credit report” as a search term on the Internet, you’ll see hundreds of offers in addition to several pop-up windows for credit reports. Why all the fuss? Because your credit report is a crucial facet of your financial identity.
“Credit” is the reputation for paying your bills on time that makes it possible for you to obtain money or goods with the understanding that you will pay for them in full at a later time.
Credit reports contain your personal history relating to credit. You have used credit if you purchased a car or took out a student loan or if you used a credit card to pay for a vacation. You need good credit to take out additional loans, to buy an apartment or a house, to buy a car, to get insurance. In fact, your credit report will be reviewed prior to every major non-cash purchase you will make.
Federal law mandates that negative information remain on the consumer’s credit report. In the case of bad payment habits, it’s seven years. In the case of bankruptcies, it’s ten years. Therefore, if you have a low credit score and want to make a major purchase using credit, that negative information may prevent you from getting the lowest interest rates, if not preventing you from making the intended purchase altogether.
On the other hand, a credit report showing a good history of paying your bills on time lets you make major purchases and is often used by employers as an objective character reference (the latter now only with your permission, however).
You should know what’s in your current report so that you know what to expect when a lender runs a credit check on you.
What a personal credit report contains
A credit report contains your contact and identification information, such as name, current and previous addresses, phone number, Social Security numbers, date of birth, and current and previous employers.
In addition, specific information about each credit account (loans, credit cards, etc.) appears, which include the date the account was opened, credit limit or loan amount, balance, monthly payment and payment pattern during the past several years.
From public records would appear Federal district bankruptcy records and state and county court records of tax liens and monetary judgments, if any.
The name of those who have obtained a copy of your credit report would also be listed on your credit report. (These most likely will be creditors from whom you have borrowed money in some way, as credit or as loans.)
Statements of dispute, if any, regarding your credit history would be listed.
What a personal credit report does not contain
A credit report concerns financial matters only. The report does not concern data about race, religious preference, personal lifestyle, political preference, medical history, criminal record, social associations, or any other information that is deemed unrelated to your credit history.
Who keeps credit reports
There are three major consumer credit bureaus: Equifax, Experian and Trans Union. Banks, retailers and credit card issuers report your credit information to the credit bureaus and are held responsible for ensuring that the information they report is as accurate as possible.
The credit bureaus use objective criteria to determine your credit worthiness and issue you a score (which may change depending on your credit performance over time). Before there were credit scores, lenders would look at each applicant’s credit report. This process was time-consuming and resulted in too much subjective judgment. Today’s credit scores are consistent and objective.
Who sees your credit report
The Fair Credit Report Act mandates that no one beside yourself may legally review your report unless they intend to:
- Conduct a credit transaction
- Make an employment decision
- Underwrite insurance
- Conduct a legitimate business transaction
- Are responding to a court order or federal grand jury subpoena
Take Control of Your Financial Life By Managing Your Credit
To build a solid credit history, you need to pay your bills on time. You can also take steps to protect your credit standing and make sure your credit report is accurate when you apply for credit.
The problem is that many credit reports contain inaccuracies. Usually these errors appear due to innocent human error or inadvertent electronic mistakes. Sometimes these errors occur because of fraud, such as identity fraud in which a thief uses someone else’s name to open credit accounts. (More about identity theft will appear in a subsequent tip sheet.)
The Fair Credit Reporting Act ensures your right to dispute any inaccuracies in your credit report without charge. To use this right, you need to be aware what information appears on your credit report. Many companies grant a free copy of your credit report. Consumer credit reports have instructions for disputing inaccurate information at no charge. Inaccurate information will be changed or deleted. Keep in mind that “credit repair clinics” can do no more legally to fix a credit report than you can do for free.
If your credit is less than perfect now, checking your report will help you identify lingering problems so you can deal with them and move on toward an improved credit rating.
Ways to help you improve your credit standing include applying for a major credit card (rather than a local card), closing old unused accounts that may have high interest rates, and checking the number of inquiries in your report. Keep balances on credit cards as low as possible. Pay your bills on time. Apply for and open new credit accounts only as needed. Pay off debt rather than moving it around. In summary, avoid overextending yourself and applying for credit needlessly.
Source: Omni Financial®
|
This is a Secure Site
Print Page