Credit
Report
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FAQ About Credit Reports & Scores
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Credit Report 101
Ever wonder what lenders and creditors look for when they
look at your credit report. Most people in the United States
don’t even know where they can get their credit report.
Here is some helpful information to help you better understand
what your credit report means, which might want to look
at it and where you can your credit report.
Currently in the United States there are three major Credit
Reporting Agencies where you can access you credit information,
TransUnion, Equifax and Experian. Experian is formerly known
as TRW. These credit-reporting agencies work hand in hand
with lenders, credits and employers and distribute your
credit information.
But how does the system work? Here are some examples
of how the credit process works.
1. When you submit an application for a credit card, the
creditor runs a credit check on your to find out your
credit history for reporting agencies.
2. Then the creditor uses this information to then determine
if a credit card will be issued to you and if so at what
rate.
3. If issued a card then when you begin using your card,
your credit card activity is reported to the credit reporting
agencies every 30 days.
4. As information is received your account is updated
5. Your credit profile changes based on your financial
activity. Each time your apply for some form of credit
this process is repeated.
Your credit report itself is divided into six
sections:
1. Consumer Information – address, birthday, and
employment
2. Consumer Statement
3. Account Histories
4. Public Records
5. Inquiries
6. Creditor Contacts
As new information is received, you file will be updated
and changes may be made to each section of your credit report.
Old reports will stay on your file for about 7 years. Not
all creditor report information to all three credit reporting
agencies, so when looking for your credit report it is a
good idea to look at all three agencies to ensure accurate
up to date information.
How to correct inaccuracies
If after viewing your report you find mistakes in your
credit report there is a process that you can follow in
order to correct these mistakes. If you find inaccurate
information you can contact the creditor or lender associated
with the mistake. These companies can usually correct the
mistake. If the problem cannot be solved then you can take
your issue directly to the credit reporting agencies
Keeping a healthy credit report
You should check your credit report every 3-6 months. This
will help guard against any damaging inaccuracies. It is
very important to keep your credit history clean. This will
help improves your credit scores and help you get he best
rates on major purchases. There are several things that
you can do to keep your credit report healthy. You can make
it a routine to check your credit report, make payments
on time, keep you credit card balances below 35% of their
limits and you should always make every effort to correct
any negative inaccuracies
Credit Report Myths
Over time several myths have been created that deal with
what you should or shouldn’t do to improve your credit
reports and scores. Below are several urban legends and
the truth associated with them.
Your Score Will Drop If You Check Your Credit
- False
Checking your own personal report is called a “soft
inquiry”. This type of inquiry does not affect you
credit report in any way. The types of inquiries that can
be damaging to your report are known as “hard inquiries”,
which come form a lender or a creditor. These hard inquiries
can bring your scored down a few points. When looking around
for a loan it is a good idea to do all of your shopping
around at the same time. Multiple inquiries for the same
purpose can be less damaging to your report and score.
Closing Old Accounts Will Improve Your Credit
Score – False
In actual fact closing old accounts can be damaging to
your credit reports and scores. Canceling old credit cards
and accounts can lower your credit score making your credit
history appear shorter. If you are considering closing an
account you should think about what you are doing. The suggested
thing to do is to ask your lender or creditor to lower your
credit limits and not close your account.
Paying Off A Negative Report Removes It From
Your Account – False
Negatives reports such as collection amounts, charge-offs
and bankruptcies remain on your account for at least seven
years no matter if they have been paid off or not. The only
thing that changes is that the account will be marked as
paid on your file. Paying off the account will help improve
your credit report but it will not remove it until the mandatory
seven-year period has expired.
Being A Co-signer Doesn’t Make You Responsible
For The Account – False
The purpose of a co-signer is that in case the primary person
on the loan or credit card cannot make the payments then
co-signer will be made to make the payments. Therefore this
co-signer is in fact responsible for the account in some
way, the responsibility is shared. Any activity on the shared
account will show up on both people’s credit reports.
The only way to stop your account from being affected is
to refinance the loan or have your name officially removed
from the account.
Paying Off A Debt Will Add 50 Points To Your
Credit Score - False
It is impossible to predict how many points you will receive
if you pay off any account. There is in fact no magical
way of improving your credit score or credit report. You
should pay your pills on time, reduce your debts and remove
negative inaccuracies in your credit report.
Check out these other articles about credit reports & scores:
FAQ About Credit Reports & Scores
Reasons To Check Your Credit Report & Score
What Is A Credit Score? Average Credit Rating
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