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The information provided on your personal credit report applies only to you. If you are married, joint items will be found on the report, but anything that is only in your spouse's name will not show up. This way when a creditor is looking at extending you additional credit, they look at all of the information available about only you. Credit reports are used to share all aspects of your personal credit history with interested parties. If you are a small business owner, your personal credit report may also be used when determining whether or not to lend money to your company.
Credit reports are not designed to be read by the average person. They often include a lot of abbreviations and codes that may not make sense. Fortunately, your credit bureau will have information available online to help you decipher it. Often, they will have a sample credit report to help you understand how to read it. In addition, the format that is provided directly to a consumer typically is a little easier to interpret than what a lender might see.
Getting a copy of your credit report is easier than you may think. The fastest way to get it is by going online to one of the big three credit reporting agencies Equifax, Experian or TransUnion. Each of their websites gives you the option of ordering a copy of your free online credit report and reviewing it online. If you are concerned about security breaches with online transactions, then you can also request a copy of your credit report by mail. As a consumer, you are entitled to get a free copy of your credit report once each year. Go online to get a copy of your free online credit report. Simply click on the "credit reports" link and follow the instructions.
Certain major negative items can cause serious damage to your credit history for a long time, but fortunately there are expiration dates that determine when the items will no longer appear on your credit report. A bankruptcy tends to stay on a fairly long time – ten years for chapter 7. If you have bad credit that is written off by a creditor as uncollectible, it is called a chargeoff. This black mark will stay with you for seven years. Other collections items, late payments and judgments will also stay on your credit report for seven years. Any account inquiries for a possible extension of credit will remain listed on the credit report for two years.
All of these items will continue to have an impact on your ability to get credit until they are removed. Some items that appear do not expire. These include your employment history and other personal information (name, address, etc.). Also, good credit items do not have a preset time period to be removed.
Anytime you want to borrow money from a financial institution, they want to find out more about your past payment history. They can do this by reviewing your credit report. This report provides them with information on whether or not you make payments on time, as well as how long you have had credit experience. All of these factors are then taken into account to establish your creditworthiness. Your creditworthiness will determine if you will be extended credit by the financial institution. It may also be used to determine the interest rate or other terms.
When you have credit report questions, where can you turn? Depending on what the question is, you may be able to contact the credit bureau for help. They can help you decipher information on the report, but they may not be able to help you with questions about specific credit items. In those cases, it is best to contact the creditor directly. At the bottom of the credit report you will find information on each creditor, including how to contact them. Start by talking directly to the creditor to see if you can find a resolution to your question.
Before you obtain your credit report, you can view a sample credit report online through any of the three credit reporting agencies. By doing this, you can get a feel for how it will look. It will also make it easier for you to interpret the information that is presented on your credit report. You can see how late payments are presented, as well as identify how major negative items appear on a credit report. In addition, if you check out a sample from each of the three big credit bureaus, you can decide which one presents the information in a format that is easiest for you to read. Then, you can order a copy of your credit report.
Not only can you check your own credit reports, you should check them regularly. You can order directly through Equifax, Experian, TransUnion, or any number of online credit report companies. Checking your own credit reports will not negatively impact your credit score. Keep in mind, though, that if you order directly, you will be charged a fee. If you'd rather receive a free credit report, you can order an annual credit report from each of the three big credit bureaus at www.annualcreditreport.com. When you check your credit reports, make sure it is error free. Sometimes information from other individuals can be inserted into the wrong record.
While there are hundreds of credit reporting bureaus at the local, regional, and national level, there are three large bureaus that almost all the others tie into. Those three are Equifax, Experian, and TransUnion. The information contained in the credit reports issued by these three companies, while similar in scope, can vary significantly. There is identifying information, such as the name, address, telephone number, Social Security number, date of birth, and past and current employment history of the individual. There is a payment history section that includes information on your credit payment history, including the number and amount of past due accounts. The public information section includes information culled from public records such as tax liens, court judgments, and bankruptcies against you, if any. Finally, the inquiry section includes a list of all official credit report inquiries, including information on who made the inquiry and the date of the inquiry. This section alerts potential lenders to the fact that you may be attempting to open multiple new accounts, which could present a credit risk.
Reading credit reports can be a frustrating, confusing thing to do. If you would like to learn more about credit reports and your credit rights, check out Privacy Rights Clearinghouse's Web site. It includes information on obtaining free annual credit reports, reading credit reports, correcting errors in credit reports, and a bunch of other valuable credit management information.
Closing an account with a negative payment history might seem like the ideal solution to cleaning up a checkered credit report. Unfortunately, that isn't the case. Closing an account does not remove it from your credit report. Negative information, whether the account is open or closed, generally stays on credit reports for seven years. Bankruptcies can stay on up to ten years. And certain other types of information can stay on indefinitely.
There are a couple of key reasons why accounts are not listed on credit reports. The creditor may not have reported the information to the credit bureau yet or doesn't report information to the credit bureaus. Your information may have been “mingled” with another report. That means that your information has actually been inserted into someone else's credit report. This usually happens when a human, somewhere along the information reporting chain, misreads a Social Security number and keys the information in wrong. If you think an account should be listed on your report, contact your lender or creditor to see if they may be reporting your account incorrectly or not at all. Get a copy of your free credit report from www.annualcreditreport.com, and make sure any changes that businesses or the credit bureau promised to fix actually have been made.
A credit report is a compilation of information that gives potential creditors a snapshot of your financial responsibility. Credit reports are used by potential creditors, lenders, businesses, employers and insurers to help determine your creditworthiness. In some cases, you will be asked to give permission to have a creditor view your report. However, under the Fair Credit Reporting Act, the consumer does not always have to give their permission. Make sure you are aware of the specific disclosure policies for different types of businesses.
If you look carefully at the application fine print, you'll see language that gives the potential lender permission to pull your credit history. However, your credit report is not the only determining factor that lenders consider when making decisions about whether or not to grant credit. Each lender has its own criteria.
There are many different scenarios under which you can receive a free credit report. Recently enacted federal legislation entitles each U.S. consumer to receive one free copy of his or her annual credit report from each of the big three credit bureaus. There is more information available about this at www.annualcreditreport.com. The other way you to get free credit reports is if you have recently been denied credit by a potential creditor. If the decision to deny credit was based in full or part on information from a credit bureau, the lender is legally obligated to notify you in writing of the name of the credit bureau used and give you instructions on how to obtain a free credit report from that bureau. It used to be that you had to submit your request to the credit bureau in writing. However, most now offer the ability to make an online credit report request for those who have been denied credit. You may also be entitled to free reports if you live in certain states, are an identity theft victim or are receiving public assistance. The report will be mailed to you, but it may take a few weeks to receive.
Generally speaking, negative information that is correct can be reported on your credit report for seven years from the time the event occurred. However, there are exceptions to this rule. Bankruptcies can be reported for 10 years. If you've been involved in a lawsuit or had a judgment against you, that information can be reported for seven years or until the statute of limitations expires, whichever is longer. Also, tax liens remain on your credit report for 15 years from the date the lien is paid or indefinitely if the lien is left unpaid. And tax lien information stays on your report for seven years from the date paid. Definitely an incentive to keep your financial house in order!
Transferring balances from one credit card to another to take advantage of promotional interest rates can be a good money management tool. However, this doesn't usually benefit your credit score. Your overall outstanding balance will remain the same. Potential creditors may view the shuffling as a sign that you are under financial stress. If you can pay off the balance rather than transfer it, that is best.
The information provided on your credit report can help a potential lender determine your ability to handle additional debt. At the top, you will find current personal information such as your name, address, date of birth and employer. There will also be a summary of your credit, which includes types of accounts (revolving, real estate, installment, collections and other), number of open accounts, credit balances and payment on each type of credit. Specific information is also included for each creditor. The information will include your payment history, your balance, payment, date opened, date the information was last reported and the type of account. Next, you will find a list of the creditors who have inquired about your credit history. It is a good idea to review this list to make sure these only include creditors you approved to review your history. Finally, a list of your creditors and their contact information will be included.
The information on credit reports includes more than just the expected credit information. To help prevent identify theft and fraud, other items are also on your credit report, such as your recent employment history and addresses. If things don't match with what you claim on an application, the creditor may question you on those things. The credit items found on a credit report include a listing of all creditors with whom you have an open line of credit, how much credit you have outstanding, your monthly payments and your payment history. Negative items, like collections and liens, may also be identified on your credit report.
|Jennifer Mathes, Ph.D.|