Understanding Your Credit


Understanding Your Credit:

TransUnion, Equifax, and Experian are the three leading credit reporting agencies in the United States. Each agency manages information that is gathered on an ongoing basis from many sources that have approved you for credit.

What your credit says about you:

Your credit tells banks and lenders if you are a good candidate to loan money to for a house, new car, credit card, student loans, etc.

Credit isn’t handed out to any person who asks for it. You must apply for it. Just like you can be hesitant to lend money to a stranger, it’s the same premise for a bank, lender, or finance company. Before they lend you money they need to know about you and your financial history before they approve you for credit.

What is a credit report?

A credit report is a record of your recent credit activities. You will see it lists any credit card accounts and loans you have in your name. It will show the balances, if you make your payments on time and on a regular basis. It can also show if there has been any action taken against you because if unpaid bills or late loan payments.

Where do credit reports come from?

Credit reports come from a CRA (consumer reporting agency). They will collect data and sell it to companies who collect information about your credit activities. They will store the information in their database and will charge a fee for supplying the information if you ask for it. The Credit Bureau is the most common type of CRA. The three major credit bureaus are Experian, Equifax, and TransUnion.

What is a credit rating?

Your credit rating comes from the charges on your credit card, loans, and repaying activities which are found on your credit report. A good credit rating will help you to reach your financial goals. On the other side, a poor credit rating will limit the financial opportunities available to you. Your credit report influences your ability to buy a new home, car, and even get a job. It is very important to protect your credit rating by making all your loan and bill payments on time. Always remember to not take on more debt than you are able to handle by not living beyond your means.

Who is allowed to see your credit report?

Credit Bureaus can only provide information to the following requestors:

·         Lenders

·         Insurance Companies

·         Landlords seeking a credit check for renters

·         Credit card companies

·         Companies where you are seeking employment (only with your written consent)

·         Organizations considering your application for a government license or benefit

·         State or local child support enforcement agencies

·         Other organizations you’ve initiated business with

·         Credit Bureaus can also create reports if required by court orders or federal jury subpoenas.

What type of information is on your credit report?

There are 4 types of information:

1. Identifying Information (Your full name, any known aliases, current and past living addresses, social security number, year of birth, current and past employers, and spousal information if applicable).

2. Credit Information (The accounts you have with banks, retailers, credit-card issuers, utility companies, and other lenders). The accounts are listed by the type of loan such as mortgage, student loan, car loan, revolving credit, and installment loans, the date you opened the account, your credit limit or the loan amount, any co-signers of the loan, and your payment patterns over the last two years.

3. Recent Inquiries: The names of those w ho have obtained copies of your credit report within the past 2 years.

4. Public Record Information:  State and county court records on bankruptcy, tax liens, or non-monetary judgments as well.

Why You Need to Keep an Eye on Your Credit Report: 

Your credit report contains your credit information which affects your chances of securing a loan, as well as the rate of interest you pay on it. This is why keeping a watchful eye on the information in your credit report is so important. It allows you to check if your credit information is accurate, up-to-date, and complete. In addition, a regular check on your credit information and score helps you to guard against identity theft.

How do errors happen?

Errors can happen just by human mistake and data input error. Common credit report errors are:

  • Incorrect report of a nonpayment on a loan or debt
  • Misfiling by a department store regarding a credit card account
  • Confusion regarding family members with the same name
  • Accounts opened without your approval by someone committing identity theft

How do you correct an error on your credit report?

·         Get proof of the error: This usually comes in the form of a letter from the creditor admitting the mistake. It’s best to have this letter or letters in hand when you request a re-score.

·         Immediately tell the credit bureau agency in writing about any information you believe is erroneous.

·         lso consider trying to correct credit report errors online. Some credit bureaus offer this service.

·         Keep in mind that results aren’t guaranteed – removing an error may or may not help your credit score.

How long does information stay on your credit report?

For the most part, all your credit history information, good or bad will remain on your credit report for 7 years. If you file for personal bankruptcy, that will stay on your credit report for 10 years.

How do you get a copy of your credit report?

You can go on the internet, write, or call to request a copy of your credit report from all three major credit bureaus (Equifax, Experian, TransUnion).

If you have any further questions please contact us. We are more than happy speak more in depth with you.

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