Various myths are spread about credit reports which are not true. However, we at Credit Bazaar, believe that it is important to get all your myths busted about credit reports by providing you accurate facts. This eliminated any and every confusion and you can be sure that whatever information you have, is correct. Following are the 14 facts about credit reports that you need to check:
- What credit reports are and who maintains them: A file that contains details about you that are reported to credit agencies is called a credit report. It discloses the way you handle accounts such as auto loans, mortgages, student loans, and credit cards. Credit reports are preserved by companies known as credit reporting agencies or credit bureaus. The three widely known credit bureaus are TransUnion, Experian, and Equifax. They collect your credit information and sell it to numerous organizations and companies. Your creditors may send your payment and debt information to one or more credit agencies that they get added to your credit report each month. Moreover, it might get listed on your credit reports if you make a delay in making payments. The key point of consideration is that credit reports might not be the same from agency to agency. For instance, your mortgage lender might report your payment data only to Experian, but the issuer of your credit card might report it to Experian and Equifax. In the United States, your credit is accumulated and tracked through your Social Security number. Hence, any resident who is eligible for a Social Security number can have their credit reports.
- Used for calculation of credit scores: Well, yes, there is no doubt that the data in your credit report is used for calculating credit scores. Just like a grade point average sums up all your schoolwork or college rank with a single number, your credit score sums up your entire borrowing history. Just like educational institutions look at your GPA for figuring out where you rank as a student, lenders look at your credit score for determining how you rank as a borrower. A credit score can be denoted just as a number that summarizes the credit risk of a person, depending on the snapshot of your credit report at a specific point in time. A credit score helps lenders for estimating your credit risk and evaluating your credit report.
- Credit reports comprise not one, but several kinds of details: Generally, the credit report of a consumer includes four kinds of data on the borrower such as account history (individual credit account information such as the date opened, balance, payment history, credit limit or loan amount, monthly payment, and payment status), identifying information (including name, phone number, address, date of birth, Social Security number, and spouse’s name), a record of inquiries into your credit history, and data from public records (such as tax liens, federal bankruptcy records, overdue child support payments, and monetary judgments).
- Credit report can be wrong too, sometimes: If you’re thinking your credit report is always perfect and can never be wrong. Well, that is not the case. Some of the information on your credit report may be wrong. When you have a good look or observe your credit report properly, you may come across some inappropriate information. For instance, a loan never taken or a credit card purchase never made. It is crucial to tackling these mistakes and errors as they could even hurt your capability for borrowing money. If you discover any mistakes on your credit report, get them fixed by contacting both the credit bureau, namely the creditor that supplied the inaccurate information and that which included the error in the report.
- You can get your scores & reports for free: Why to spend if not that urgent? Well, then you must know that everyone is permitted to have one complimentary annual report from each of the three major credit agencies. We understand you might not feel like paying for your credit report, but if it is free of cost once a year, there is no reason not to go for one. Many people might not be aware of this, but every person is eligible for one complimentary report. Also, if you cycle through the credit agencies, you can check your credit report every four months. This will enable you to catch any inaccuracies in time to time manner so that you can easily dispute them. This will make sure that you always have a proper and accurate overall picture of your financial situation at all times. Your credit report can be freely obtained from several other places too. Credit Bazaar provides you a free credit report by availing its services of Bazaar Improvement Plans. Whereas, customers interested in viewing their credit score every month will need to buy them. Various credit cards also offer free credit scores to their clients.
- Only credit card issuers or banks do not view your credit report, they are viewed by service providers too: Yes! Employers and service providers may also review your credit report for various reasons such as to understand if you handle your credit responsibly and if you are dependable or not. The credit behavior makes many things clear about you to them. So, it is not only the banks and credit card issuers that are interested in your credit report. The consumer credit report information is utilized by various employers and several service providers for services, credit, and employment. Simply put in other words, credit histories affect more than just applications for credit, they may also matter when you are applying for a job or purchasing a cell phone plan.
- Only credit-related information is given on your credit report: Credit reports include basic identifying information, such as your name, employer and address. They never include your gender, education level, race, bank balances or political affiliation. Your credit reports hold details about your credit accounts, including, account type, date opened, account status, loan amounts and balances, credit limits, and payment history. Credit reports also contain a section listing inquiries that have been made by companies that have viewed your credit report. Soft inquiries, such as pre-approved credit card offers, don’t affect your credit scores; though, hard inquiries, such as applications for credit cards and loans, are a credit-scoring factor. Legal actions that have been taken against you also might show up in your credit reports, such as a foreclosure, tax lien, or bankruptcy. Credit agencies get hold of this information from public records.
- No married couples joint reports: Well, love makes the world go round, but not with credit reports. There’s no such thing as a joint credit report, for any pair or married couples. So, single or married, you have your credit report, one that’s associated with your Social Security number. If you’re married, you and your spouse may have several joint accounts, such as car loans, shared credit card accounts, and mortgages. Those joint entries and items will show on both your credit reports and will affect both of your credit scores. However, your credit report is yours and yours alone.
- Credit history on your report does not depend on your age: Your age has nothing to do with your credit report. The only thing matters are the length of time you have had credit for. So, the age of your credit is important and not the individual age of a person. Right from when you first started using credit till today, and how have you handled the same, will be put into scrutiny.
- Credit reports are different from credit scores: Though your credit score is associated with your credit report, they are two separate things. Your credit report is a thorough record of your credit history, including your debt collection accounts, how often you apply for credit, credit accounts, and some public records, including judgments, liens, and bankruptcies. Imagine your credit score as a numerical summary of all these aspects. If you have delinquent accounts on your report, that brings your credit score down. If you have a strong on-time payment history, that increases your credit score. Most lenders only look at your score, and this is why it’s important to check your credit report regularly and ensure everything is accurate. Both your credit report and credit score are kept by the three credit agencies.
- Credit reports based on the social security number: In the United States, credit data is compiled and tracked by your Social Security number. Hence, any resident who is eligible for a Social Security number can have credit reports. Credit reports are never merged with someone else’s, even when you’re married. Credit bureaus don’t take credit or lending decisions; they simply handle your data. Your reports are important because they’re used by a variety of businesses to evaluate you, including, lenders, landlords, Credit card companies, and employers. The data in your credit reports is also used to generate a variety of credit scores. In general, the higher your three-digit scores, the more creditworthy and less risky you appear to possible creditors.
- No data will forever remain on your credit report: As several myths mention that credit information stays on your credit report forever, it is completely false. There are certain time limits set for how long a particular data can show on your credit reports. Time limits are set for how long data can stay in your credit reports. Credit accounts with only positive data, such as a credit card with no late payments, show in your history for 10 years. But accounts with negative information, such as late payments, or most legal actions (such as a lawsuit or judgment) stay on your credit history for at least seven years. For instance, if your mortgage payment was due January 1, 2017, and you failed to pay it, it became delinquent on February 1, 2017. Your credit report will continue to show that you were 30 days late on that payment for seven years, or until February 1, 2024. Also, even if you later catch up and pay the delinquent amount. Though, having a Chapter 7 or Chapter 13 bankruptcy is a negative entry that can remain on your credit reports for up to 10 years.
- Errors on your credit report can be corrected: You can dispute all incomplete or inaccurate data on your credit reports. So if you see any inexact information on your credit reports, ask that it be corrected as instantly as possible. Common errors to watch for include having accounts listed that belong to another person. In some cases, incorrect accounts are the result of being the victim of identity theft, which you should clear up immediately. If you find an error, you’ll need proper documentation to support your claim. For instance, if you see a late payment that you didn’t make, you’ll need to find information showing when the payment was sent or when it cleared your bank account. You can upload dispute-related documents on a credit bureau’s website or send them by mail. Send any correspondence by certified mail and mark “return receipt requested” so you have a record of the bureau receiving it. Include your request letter and supporting documents, and a copy of the credit report with the error marked clearly.
- Many facts are checked before making a credit report: The credit bureaus confirm your personal information by making sure your name, any current, former names, and previous addresses, and Social Security numbers are accurate. You also might see the names of previous and current employers as well as your phone number. The agencies check your credit accounts by carefully reviewing the details of your current and past credit accounts, such as the date opened, original loan amount, payment history, payment terms, credit limit, and outstanding balance. The bureaus verify your collection accounts for making sure the information is correct. You can’t erase negative information from your credit report if it’s correct, but you can get inaccurate data corrected. Check any listed public records for correctness. Review inquiries, which come from organizations or companies that requested a copy of your report during the previous year or two.
Conclusion: Credit Bazaar aims at providing all-round assistance to their clients regarding credit reports and credit scores so that you do not have to find your way along these false myths. Overall, the above-given facts give you a clear picture of the entire credit report scenario. Thus, all those age-old myths are broken such as credit report puts into consideration your age, race, religion and so on. As you see, credit reports only observe your credit behavior and information.
For any queries regarding Credit Score improvement or Loan contact Credit Bazaar CR Arcade 2nd Floor, Opposite Delta Garden, Next to Shree Mahalaxmi Restaurant, Mira Road East, Thane: 401107