Most of us come across the term credit report but don’t understand what it represents. However, your credit carries a lot of importance. You need to learn how to check it and analyze it thoroughly. Many financial opportunities and decisions depend on your credit report. You won’t be able to do certain things without a good credit score. Your credit score tells all organizations whether you are reliable with your money and how much they can trust you.
What is the Credit Report?
Have you ever considered how lenders and banks determine who they will lend to, along with other financial services? If you haven’t, maybe you should because you might eventually need their help, and you would want to do whatever you can to convince them that you are reliable.
One of the most important things that lenders check for each of their potential customers is credit reports. Banks and lenders can learn about your credit history through your credit report and assess your risk. It helps them determine whether lending you money is worth the risk. This is why it’s generally a good idea to learn more about credit reports and how to manage them and improve to get more approvals.
What do you need to know about Credit Scores & Reports?
In a way, a credit report is your CV for finances. When lenders look at this document, they verify your identity and see if you have all the financial qualifications for a loan, credit, or something else. Your credit report includes all financial connections, current address, credit account information, payments you’ve made in the past, current loans you might have, and so on.
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Credit reference agencies are commercial organizations that create these reports. However, these agencies don’t always cooperate and share information, so the same person’s credit report might differ slightly from each agency.
What Are Companies That Compile Credit Reports
In the US, credit reporting agencies or credit bureaus are the organizations in charge of keeping track of credit reports. These companies maintain and gather credit information about consumers. They do this continuously and sell this information to other companies as credit reports. These companies are called credit reference agencies in the UK but do the same thing. All of Canada, the UK, and the US have three leading Credit Bureaus, including:
- TransUnion
- Experian
- Equifax
However, these aren’t the only agencies. There are smaller companies as well, and they offer more specialized services. However, when a bank or creditor wants to check someone’s credit, they do this through one of these three major agencies.
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Who Controls Credit Reporting Agencies?
The majority of credit reporting agencies are privately owned and traded publicly. The government doesn’t own them. However, in the US, federal legislation, FCRA (Fair Credit Reporting Act), regulates and controls all credit bureaus’ operations. At the same time, the OCC (Office of the Comptroller of the Currency) and the Federal Trade Commission also monitor these companies and whether they comply with the legislation. The information gathered and handled by reporting agencies is sensitive personal data, so tight regulation is necessary.
What Information Can I Find in my Credit Report?
The information in your report can vary from one country to another. However, in most cases, it includes:
- Information about people who are financially tied to you. For example, this information will be in the report if you have joint credit with someone.
- This report includes information about all the credit accounts in your name: credit cards, checking accounts, loans, utility debts, and so on. Additionally, it will include information about your repayments if you paid them in full and on time. Negative information like defaults, late payments, missed payments, and others will stay on the report for around 6 years.
- Reports also include public record information, such as bankruptcies and property repossessions, which are kept on file for 6 years.
- Information about current account providers.
- Date of birth.
- Full name.
- Current address and previous locations you lived at.
- The CIFAS section of the report will include information about fraud or identity theft.
It’s important to note that your credit report will not contain personal information such as religion, salary, criminal records, etc.
Things That Can’t Be Seen in Your Credit Report
- Driving & parking fines
- Criminal records
- Medical records/history
- Federal or private student loans
- Savings accounts
- Current Salary
- How much money do you have in your account at the moment
Who Needs to Check Your Credit Report?
No matter what kind of credit you apply, the process almost always includes permitting your credit provider to run a credit report check. Lenders often make these checks mandatory; without them, they will not even consider giving loans or credits. All credit providers need insight into this information to ensure the potential customer isn’t a significant risk. They need to ensure their interests as well. If they see that you never paid off your loans or bills in time, the chances are that they won’t believe you to be a reliable customer.
What is a Credit Provider
Credit providers include companies like banks, credit card merchants, telephone service providers, and all companies that offer contracts that need to be paid monthly. In some situations, landlords and employers have the option to see your credit report. However, to these people, the data available is limited to public record information only:
- Decrees or Country Court Judgements
- Insolvency information
- Electoral register information
When is a good idea to check my credit report?
When applying for a credit card, mortgage, loan, or borrowing contract, you should check your credit report first. This is especially important if you haven’t done this in a long time. People often forget what they did and aren’t aware of how their actions affected their credit reports.
On the other hand, it’s generally a good idea to check your credit report regularly to ensure there aren’t any mistakes. Yes, credit reporting companies make mistakes, too, and you need to fix them as soon as possible before they damage your credit score and your chances of getting a loan. You might have overlooked some payments, and the report can remind you to make them as soon as possible.
What You Need to Know About Checking Credit Report
Here are three essential things you should know about checking your credit report:
- You can check it anytime you like
- You can check it as many times as you want
- Checking credit reports doesn’t affect your credit score or credit rating
Checking your credit report by going to a credit reporting agency doesn’t affect you. However, applying for a loan when the lender does a check will leave a mark on your file. The more of these you have, the more you will seem desperate to find some credit, and this can be a red flag to some lenders.
How to Check Your Credit Report
All credit reporting agencies are statutorily obligated to provide people with free copies of their credit reports when they ask for them. You need to find a credit reporting agency and ask them for a physical copy or go to their site to get the report online.
Go to the Information Commissioner’s Office website for more information about getting a physical copy. However, most credit reporting agencies give free lifetime access to credit reports online. You will often have to pay some money for a written copy, which takes time to arrive. This is why it’s generally better to go online and find one.
Final Word
Make sure to check your credit report regularly. If you want creditors to take you seriously, you must prove it by maintaining a clean credit report. This will further improve your credit score, which is one of the essentials for getting loans, credits, and other financial contracts.