Credit Report 101 – Understanding your Credit Report

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Basic understanding of your credit reportFor the past years, the method of payment in different commercial businesses changed. People no longer have to fear carrying cash in their pockets or need to spend a lot of time looking for automated teller machines (ATM) whenever they plan on buying something or paying bills. The use of credit cards especially in the US is a method of payment used by almost everybody. It is not only used for buying things but also for paying for educational fees, loans, insurances, etc.

The use of credit cards has been a great help to everyone, it has made things easier for users. It’s more convenient for everyone because it gives them a chance to buy things and have a longer time to pay for these purchases.

However, only some users know that there are certain things that can affect one’s ‘creditworthiness’. This is called the credit score. This determines whether one is allowed to incur more credit or to have a credit higher than what they can actually afford.

What is a Credit Report?

Just like in school, this is like a person’s report card, a determinant whether you have passed for the next level or not. Financially speaking, your credit report contains information about your credit. Your payment history, remaining credits, existing credits, amount of payment and all the other things regarding your financial status. Credit reports also include declarations of bankruptcy, payment or availability of properties or rentals, and other public obligations that you have to fulfill.

Your credit report will be the basis for lenders, banks, employers, landlords and other service providers to lend you more credit or to help them determine whether they will approve your application or not. That is why it is important to frequently check on your credit standing.

Information Included in your Credit Report

Personal Information – This is the most basic information in your credit report. These things are all compiled from previous companies and will be obtained by future service providers you may come in contact with. This information include your name, contact number, current address, past addresses, attended school, Social Security Number, and other basic information about you.

Credit History – Most of the information in your credit report is about your accounts. Your existing credit, other people listed as authorized users such as your spouse, payments, debts, bankruptcy declarations, number of active credit accounts, closed accounts, reasons for closed account, etc. and all the things connected to your financial responsibilities and capabilities.

Credit Inquiry – An inquiry occurs when you apply for a credit line. The creditor will pull your credit, or inquire, in order to determine if they can approve your application. The number inquires on your credit status will also reflect in your credit report. This will be shown to future lenders, investors, insurance companies, and other agencies that will be connected to future or existing credit lines. Inquiries reflect on reports for two years.

Public Record – This includes liens, overdue child support, bankruptcies, etc. These are basically financial situation you’ve been through that involved the court. This information stays in your credit report for up to 7 years.

What is not included in your Credit Report?

  • Savings or checking accounts from banks
  • Public records that are 10 years or more
  • Gender, ethnicity, religion, political affiliations
  • Criminal records
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