| Today we have grown into a nation looking for instant | | | | lend you money. Your credit score is a snap shot of |
| gratification, the buy now pay later syndrome. So, | | | | your credit at that point in time, and can change on a |
| without a good credit rating it will be very difficult to get | | | | daily basis. The score is a three digit number ranging |
| the things you want at the time you want them. | | | | between 300 and 850. Statistics show that the higher |
| Consumer credit has become widely accepted as a | | | | the number the less likely you will default on a loan, |
| substitute for ready cash, so having good credit is the | | | | therefore you are a good credit risk; and the lower the |
| key to your future of getting all you deserve, and the | | | | number the greater chance there is for you to default |
| key to opening doors that make your life more | | | | on your payments, making you a greater credit risk. |
| comfortable and worry free. | | | | When your credit score is low, you still may be able to |
| As a consumer it is to your benefit to fully understand | | | | borrow money but, you will most likely have to pay a |
| how credit works and every aspect of what is | | | | higher rate of interest and you may not get all the |
| involved when you apply for any type of credit, | | | | money you request and possibly have to pay |
| including the major credit reporting agencies that hold | | | | additional fees, basically you are at the mercy of the |
| your credit report file. When you understand what the | | | | lender. However, the higher your credit score is the |
| banks and other creditors are looking for, and you | | | | more you are in-charge, you can get any loan at the |
| know what is in your credit report, you will be able to | | | | best possible rates with no restriction. |
| control your financial future and make the best choices | | | | Your credit score is a complicated calculation, where |
| for yourself and not accept anything less than what | | | | the credit reporting agency takes into consideration |
| you deserve. | | | | many factors, including but not limited to, your payment |
| When you apply for credit, lenders want to know | | | | history - late payments, both current and previous will |
| about you, your employment history, your income, your | | | | bring down your score; your credit balance in relation |
| assets, and most importantly they want to know about | | | | to you limit - if you are at your maximum credit limit or |
| your credit history. A lender will get lots of information | | | | if you are over it will bring down you score; the number |
| directly from you through a credit application, then, they | | | | of inquires - if you have to many in a short period of |
| will pull your credit bureau reports to confirm this | | | | time it will bring down your score; the length of time |
| information and review your credit references and | | | | you have had credit, the total number of outstanding |
| credit report scores. Then upon evaluation of your | | | | debts and any derogatory information or public |
| credit application combined with your credit report, the | | | | records, such as bankruptcies, collection, judgments |
| lender will determine your credit risk and make a final | | | | and written off accounts - will bring down your score. |
| decision on whether or not to grant you credit and at | | | | Where does the information on my credit report come |
| what rate of interest they will charge you. | | | | from? |
| So, now that you know the process of getting credit, | | | | Your credit history information is gathered at |
| let us take a deeper look into the factors that can | | | | companies called credit bureaus or credit reporting |
| either be an asset or liability to you when applying for | | | | agencies. There are three major credit reporting |
| credit - your credit report. | | | | agencies, Equifax, Experian and Trans Union. They |
| What is a credit report | | | | receive information voluntarily from creditors and the |
| Your credit report is your financial resume, a summary | | | | credit reporting agency updates and maintains your |
| of your financial reliability, containing both personal and | | | | credit report file with this information. Creditors report, |
| credit information. Your credit report is maintained by | | | | loans, credit cards, mortgages, on a regular basis |
| credit reporting agencies, also known as credit | | | | electronically. Your file is also updated when you apply |
| bureaus, and provided to lenders, employers, insurance | | | | for credit, as the information from your credit |
| companies, landlords and other companies who have | | | | application is submitted to the credit reporting agencies |
| a legitimate need for this information, based on the | | | | when they pull your credit report. |
| federal Fair Credit Reporting Act (FCRA). Your credit | | | | Who are the major credit reporting agencies |
| and personal information is reported to the credit | | | | There are three major credit reporting agencies. |
| reporting agencies from various creditors, in most | | | | Equifax, Experian and Trans Union. These are |
| cases electronically, instantly updating your file. | | | | independent companies from one another, and it is |
| What is in my credit report | | | | important for you to know that they do not exchange |
| Your credit report is divided up into five main areas: | | | | information. This means that it is quite possible that you |
| personal profile/identifying information, inquiries, credit | | | | not only have a separate credit report with each of |
| history, public record information and your credit score. | | | | them, but that they may contain different information. |
| PERSONAL PROFILE / IDENTIFYING INFORMATION | | | | There are hundreds of smaller credit bureau |
| - this is where all your personal information is recorded | | | | companies across the country however these major |
| - your name including any alias and possibly your | | | | credit companies are the largest and the main bureaus |
| spouses name, current and previous addresses, Social | | | | that the banks and financial institutions use. You will find |
| Security number, date of birth and current and | | | | that creditors may use one of the three credit |
| previous employment. You might find some of this | | | | reporting companies, however it is not unusual for |
| information is incorrect or incorrectly spelled, this can | | | | them to use all three. |
| occur when creditors pull your credit bureau as they | | | | Who has access to my credit report |
| usually enter in the information though the computer | | | | The Fair Credit Reporting Act (FCRA) contains rules |
| where data entry errors can occur, and these | | | | regarding who can access your credit report. |
| mistakes will update your credit bureau report. | | | | Generally speaking, a credit reporting agency may only |
| However, if there is information that is not even close, | | | | provide information from your credit file when the |
| such as an address, this should alert you to investigate | | | | requested relates to the extension of credit, collection |
| this further as it is a possibility that you may be a | | | | of a debt, a tenancy applications, an application for |
| victim of identity theft. | | | | employment or insurance, the issuance of special |
| INQUIRIES - in this section you will find listed all the | | | | licenses or potential financial dealings that involve you. |
| parties that have requested a copy of your credit | | | | The law also gives these companies access to your |
| report and the date it was done over the past two | | | | report as part of an ongoing business relationship. An |
| years. There are two types of inquires, soft and hard. | | | | example of this would be you have a loan at a bank |
| A hard inquire is when you have applied for something | | | | and you miss your payment, this gives that bank a |
| and is initiated by you, for example, you have applied | | | | right to obtain an updated copy of your credit reports. |
| for a loan or mortgage or completed a credit | | | | Credit card companies use this option a lot. They |
| application for a credit card or even applied for | | | | consider it part of the maintenance of your account. |
| insurance. These hard inquiries are the ones that | | | | As credit cards are revolving (not a closed end loan), a |
| appear on your credit report and are visible to | | | | customers circumstances can change, so credit card |
| creditors when they access your credit report. A soft | | | | companies will obtain updated credit reports on their |
| inquiry only shows on your credit report when | | | | customers to review them and look for warning signs |
| requested by yourself and do not show to the | | | | of a customer getting over extended in credit which |
| creditors. A soft inquiry can come from your existing | | | | could result in problems fulfilling their obligations. This is |
| creditors that are monitoring your account, companies | | | | how credit card companies can either raise or lower |
| that are looking to offer you promotional applications | | | | your credit limit or interest rate automatically. However, |
| for credit and each time you request a copy of your | | | | in the case of an employer, this law does not apply |
| credit report. | | | | and they need the employee's permission each time |
| CREDIT HISTORY - in this section you will find an | | | | they wish to request a copy of your credit report. |
| itemized list of your credit cards, loans and mortgages, | | | | You are also entitled to copies of your credit reports, |
| both currently active accounts and past closed ones. | | | | and today with the internet there are many fast and |
| The information reported includes, type of account, | | | | easy ways to obtain credit reports online. You can |
| when it was open, the high balance or limit, monthly | | | | purchase a copy from each of the major credit |
| payments, date of last payment, how the account is | | | | reporting agencies, Equifax, Experian or Tran Union, the |
| paid including any late payments, date of last activity | | | | cost may vary however, under the latest Federal |
| and a rating of how the account was paid. | | | | Trade Commission (FTC) rules they are restricted to |
| PUBLIC RECORDS - this information is obtained from | | | | the maximum amount they can charge you. Check |
| local, state and federal courthouses and includes | | | | with your state laws, as some states require the credit |
| bankruptcy records, foreclosures, tax liens, monetary | | | | bureau companies to provide you with a copy of your |
| judgments, court-ordered payments, and over due child | | | | credit report periodically for free. The FCRA gives you |
| support payments. Public records are a negative credit | | | | the opportunity to receive a copy of your credit |
| reference and will lower your credit score. They also | | | | reports if you have been denied for credit or other |
| stay on your credit report anywhere from six to ten | | | | benefits based on your credit report, you are entitled |
| years. | | | | to receive a free credit report from the credit bureau |
| CREDIT SCORE - your credit report scores are a | | | | that provided the report. The FCRA also allows you |
| rating determining you credit risk and the likelihood of | | | | obtaintotally free credit reports. If you suspect that you |
| defaulting on a loan. Lenders will use this score as a | | | | are a victim of identity theft or fraud, if you are |
| tool to assist them in deciding whether or not they will | | | | unemployed or if you receive welfare assistance. |