Credit Reports

CreditReport A credit report is a summary of an individual’s credit history. This report contains any information regarding current and past borrowing history. It shows any payments made, late or on time, and any bankruptcies. Each of these items helps to create an individual’s credit score.

Three different credit bureaus provide credit reports and credit scores for individuals. These include: Experian, Trans Union, and Equifax. A credit report is important, because it determines one’s credibility and one’s borrowing in the future. Lenders can pull a consumer’s credit report and decide on whether or not a consumer is worthy of more credit via a loan.

Sometimes credit reports fail to update items or because of identity theft and things of that nature, negative items are mistakenly placed on credit reports. When this happens, consumers have the right to dispute such items. The credit bureaus, then, have 30 days to verify the negative items. Upon verification, they are required to notify consumers that either a change has been made to update the credit report or that the mistake is no mistake and in fact, actually true.

Because of the world we live in today consumers should check their credit report often. There are several websites, which are legitimate and offer a free annual credit report. By pulling this each year, consumers can keep themselves up-to-date on whether or not their credit reports give an accurate account of their credit history.

Items, which can be looked upon negatively, include a consumer having too many lines of credit open. If a consumer applies for too many loans (i.e. car loans, house loans, etc.) at once, this can be looked on as a negative action and bring a consumer’s score down. Delinquent debt payments hurt a consumer’s score, and low payments can also lower a credit score. (It’s important to note that consumers wishing to borrow money need to consider current income, combined with debt to income ratio. Typically, if this ratio surpasses 30 percent, no lending institutions will allow a consumer to borrow money. Or if a lending institution does, the loan will be made on a much higher interest.) Further, another issue happens when a consumer pulls their own credit too often. Although bankruptcy offers debt relief to consumers who have sunk to far in the hole, they ultimately have an extremely negative impact on credit reports. These items stay on credit reports for ten years upon their discharge and for that period of time, consumers will find it difficult to borrow money through any type of loan.

The best thing to insure a good credit score involves proper financial management on a consumer’s part. Faithful payments should be made on debts or rather, consistent payments, higher than the base payment required. This means paying off credit cards each month. Making consistent, faithful payments on a mortgage or a car loan can help increase someone’s score. Keeping few lines of credit open and using debits or cash will also help a consumer’s score to stay high.

It is important to have lines of credit, in order to establish actual credit. However, too much of anything is a never a good thing. If consumers will utilize financial means wisely by budgeting and keeping track of their borrowing history, this will keep their credit scores on the up end. Credit reports protect consumers, who follow these guidelines.

References
1)http://en.wikipedia.org/wiki/Credit_report
2)https://www.annualcreditreport.com/cra/index.jsp
3)http://www.experian.com/
4)http://www.transunion.com/
5)http://www.equifax.com/home/en_us
6)http://www.ftc.gov/freereports

Written by: Clint 01/04

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