Credit report is not a trivial thing. It is actually a reflection of how much you’re creditworthy. In short, your credit report will determine how much you are eligible for renting a home, getting a job, home loans, student loans, credit cards. Credit report is all about information of your credit history (debts,loans,personal information). Most importantly it is an overview of your every financial transaction.
What kind of information is there on credit report?
Credit report format will depend on credit bureaus or credit reporting agencies. But basic categories are same.
- Information of personal identification: Name, date of birth, social security number are needed for identification.
- Past credit report inquiries: You should allow your lender to ask for documents of your credit report at the time of applying for loans. These inquiries are compiled in your credit report.
- Public records: Liens, bankruptcies, overdue child support are included as public record on your credit report.
- Accounts details: Credit report contains all your account details (type of account, date, credit limit, amount of loan, payment history, balance).
2 Fact of credit reports that matters
Credit report play a leading role in your life.The three credit reporting agencies (Equifax, TransUnion and Experian) maintain the details of your personal finance. Credit card companies, lenders, landlords, mortgage brokers, bank can get your credit report from credit bureau whenever they need.They buy your credit report to decide if you are eligible for a loan, a service at a particular rate.
- To get a job: Your credit report will be checked by employers when making job decisions. They will consider you as a responsible and potential employee after checking your credit report. Incase, your credit report is bad, and you make any financial mistake or you don’t pay the bills regularly, they may not offer you the job.
- To obtain a loan: Lenders will check your credit report before giving you loan. They will check the total amount of credit you have and you used on specific types of accounts (credit cards, auto loans, mortgage). Try to owe less money because lender will check if you’re able to pay back the money .Try to maintain your credit responsibly for a good credit score.
How bad credit affect your personal life
You will face many hurdles if you have a bad credit history. If you’ll not pay all the due bills or rebuild your credit, you’ll never reach your goal.
- Risk of an expensive service: You may face expensive offers to get services (cell phone, electric). The service provider can give you pressure for enrolling your name on monthly basis contract, whereas if you have good credit, you can go for yearly basis contract.
- Chances of loan problems: If you apply for a car loan with bad credit history, you’ll be charged high interest rates. Moreover, it’ll be impossible to obtain a business loan with bad credit.
- Rental problems: You should pay several month’s rent in advance as high security deposit at the time of renting a house with bad credit history.
4 Items that are not included in credit report:
A credit report will not contain any information about your
- Savings account.
- Political affiliation.
- Medical history.
- Criminal records.
6 Myths and facts regarding credit report
Myth 1# The credit item will be removed after paying off the delinquent loan
Facts: Some negative records (bankruptcy, collection accounts,late payments) will stay on your credit reports for 7 years to 10 years for some bankruptcies. The credit item will be marked and updated as paid in report after paying off delinquent loan.
Myth 2# Bad credit does not affect a candidate in job search.
Facts: An employer has the right to check a candidate’s credit report at the time of hiring and promoting according to the Federal Law.
Myth 3# It is harmful to check your own credit report.
Facts: Credit score will not be affected if a consumer access his/her own credit report.
Myth 4# Credit bureaus are controlled and monitored by the Government
Facts: Credit bureaus are not controlled by the Government. But the agency must follow the laws.
Myth 5# Credit is main reason to get into a financial trouble.
Facts: Spending too much is the main reason to get into a financial mess. Set a proper budget and maintain your credit wisely to get a secure financial life.
Myth 6# Education is the key to maintain a good credit score.
Facts: Credit report contains only debt related information, not your educational qualification. Credit card payment history, loans, foreclosure, bankruptcy, etc. are included in credit reports. On the other hand, socks, bonds, investment will not be in your credit report.