Most of us come across the term credit report, but don’t actually understand what it represents. However, your credit report carries a lot of importance. You need to learn how to check it and analyze it thoroughly.
There are many financial opportunities and decisions that depend on your credit report. Without a good credit score, you won’t be able to do certain things. 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 thought about how lenders and banks determine who they are going to give loans to, along with other financial services? If you haven’t, maybe you should, because you might get to a point where you need their help, and you would want to do whatever you possibly 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 make a risk assessment about you.
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, how you can manage them, and improve to get more approvals.
What do you need to know about the Credit Report?
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.
The information visible in your credit report includes all your financial connections, current address, credit account information, payments you’ve made in the past, current loans you might have, and so on.
Credit reports are created by credit reference agencies, which are commercial organizations. However, these agencies don’t always cooperate and share information amongst themselves, and this is why the same person’s credit report might be slightly different from each agency.
What Are Companies That Compile Credit Reports
In the US, the organizations in charge of keeping track of credit reports are called credit reporting agencies or credit bureaus. These companies maintain and gather credit information about consumers. They do this on an ongoing basis and sell this information to other companies as credit reports.
In the UK, these companies are called credit reference agencies, but they do the exact same thing. All, Canada, the UK, and the US have 3 leading Credit Bureaus, including:
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.
Top 5 Credit Cards Reporting Credit
Who Controls Credit Reporting Agencies?
The majority of credit reporting agencies are privately owned and traded publicly. They aren’t owned by the government. However, in the US, there is a federal legislation FCRA (Fair Credit Reporting Act) that regulates and controls the operations of all credit bureaus.
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 are complying with the legislation. The information gathered and handled by reporting agencies is sensitive personal data, and this is why tight regulation is necessary.
What Information Can I Find in my Credit Report?
The information in your credit 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, if you have joint credit with someone, this information will be in the report.
- Information about all the credit accounts on your name: credit card accounts, banks, 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 stick around on your report for around 6 years.
- Reports also include public record information like bankruptcies, property repossessions, etc. These also stay on the report 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 thefts.
It’s important to note that your credit report won’t have any personal information like religion, salary, criminal records, and so on.
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 you have on your account at the moment
Who Has the Need to Check Your Credit Report?
No matter what kind of credit you are applying for, the process almost always includes giving permission to your credit provider to run a credit report check. In fact, lenders often make these checks mandatory and, without them, they will not even consider giving loans or credits.
All credit providers need to have an insight into this information to ensure that the potential customer isn’t a big 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, basically, all companies that offer contracts that need to be paid on a monthly basis. 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 it a Good Idea to Check My Credit Report?
When applying for a credit card, mortgage, loan, or any other type of borrowing contract, you should first check your credit report. This is especially important if you haven’t done this in a long time. People often forget about the things they did and aren’t aware of how their actions affected their credit report.
On the other hand, it’s generally a good idea to check your credit report regularly to ensure that there aren’t any mistakes in it. Yes, the 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 some sort of a loan.
Because, you might have overlooked some payments yourself, and the report can remind you to make them as soon as possible.
What You Need to Know About Checking Credit Report
Here are some 3 important 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 on your own by going to a credit reporting agency doesn’t affect you in any way. However, when you apply for some kind of loan when the lender does a check, it will leave a mark on your file. The more of these you have, the more you will seem desperate to find some sort of 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. To do this, you just need to find a credit reporting agency and ask them for a physical copy or go to their site to get the report online.
If you need more information about getting a physical copy, go to the Information Commissioner’s Office website. However, most credit reporting agencies give free lifetime access to credit reports online.
In a lot of cases, you will have to pay some money for a written copy, and it takes time for it to arrive. This is why it’s generally a better idea to go online and find one.
Make sure to check your credit report regularly. If you want creditors to take you seriously, you will have to prove it by maintaining a clean credit report. This will further lead to an improved credit score, which is one of the essentials for getting loans, credits, and other financial contracts.
Credit Report & Score FAQs
As soon as you notice that there is any incorrect information on your report, make sure to get in touch with the credit report agency that gave it to you. At the same time, make sure to contact the creditor that didn’t deliver accurate information. Do this as soon as you can. Having faulty information might hurt your credit score in the future and make it difficult to convince future creditors to help you out.
Simply put, there are 2 major reasons why you should do this:
1. The first reason is to ensure that there aren’t errors on your credit report that can harm your chances of getting a mortgage, buying a home, getting credit, or opening a new account. These errors happen really often, and you need to keep track of what is going on.
2. The second reason why you should do this is to check if someone has stolen your identity and is buying things using your name.
Your payment history and the financial decisions you’ve made in the past are the most impactful aspects of any credit score. Given the fact that your credit report is nothing more than the history of your financial actions, it carries a lot of importance.
In most cases, the information on your credit report will stick around 6 to 7 years before it is removed. However, some credit report agencies like to keep the information for up to 10 years. No matter the case, you need to work on improving your credit report rather than waiting for negative information to be removed.
Related: Secured Credit Cards for Credit Building