- what you need to know.
Your credit report is a very powerful report
that essential controls what you can and cannot do in your life.
Unfortunately many people arenít aware of what a credit report actually is
and what information is contained on the report. This article breaks down
what is contained on your credit report and tells you everything you always
wanted to know about your credit report but were afraid to ask.
Your credit report is nothing more then a very detailed snapshot of your
financial history that is furnished to anyone supplying you credit from the
credit bureau. There are three main credit bureaus that handle a majority of
these credit report request. They are Experian, Equifax and Trans Union.
Each of these organizations are private in nature and routinely furnish your
credit information when asked to do so for a fee.
Generally speaking the credit reports provided by the credit bureaus are
very detailed and very accurate. For instance itís not uncommon for them to
have information regarding missed payments as far back as 6 or 7 years. They
collect this information in order to provide it to creditors prior to their
providing any form of credit to a consumer seeking credit. The creditors can
use the information they receive to determine if that same consumer can be
considered a good credit risk. A good rating allows for more favorable
credit terms while a poor rating essentially ends any chance for a consumer
to obtain credit in the first place.
The amount of time that a blemish (such as a missed credit card payment)
stays on your credit report can vary but normally these negative items are
deleted after 7 years thanks to the Federal Fair Credit Reporting Act.
Bankruptcies are another matter entirely and they normally remain in place
for up to 10 years. Keep in mind that credit inquiries stay on your credit
report for 2 years so closely monitor the number of times you apply for
credit since a high number of inquiries can be viewed in a negative manner.
Until recently in order for a consumer to view their credit report they had
to order a copy from one of the three main credit bureaus and pay a small
fee. However new laws now allow for 1 free credit report every year to any
consumer that wishes to see their credit report.
The power of your credit report is incredible. Even if you have built up a
positive credit report any missed payment no matter how small the amount can
result in a denial of credit. The best advice most credit can give is to
stay current on your entire monthly financial or reoccurring obligations and
donít overextend yourself financially.
Check Yours RegularlyÖand for Free
In the twenty-first century, there are few documents that have a greater
impact on the lives of Americans then their credit report. Credit rating
determines oneís ability to buy a home, a car, or to obtain a credit card or
a job. Since these things are important, it is equally important that the
information be accurate. The only way to be sure of that is to check the
report regularly. Prior to last fall, there were two ways to obtain a copy
of your credit report: to pay for one, or to obtain one for free after being
denied credit. Thanks to the Fair Credit Reporting Act passed last year,
Americans can now obtain a free copy of their credit report from each of the
three credit reporting agencies once a year.
Due to anticipated heavy response to the offer of free credit reports, the
program has been rolled out in stages. People living in the West and Midwest
are already eligible to apply for a copy of their report. As of June 1,
2005, those living in the Southeast are now eligible, and on September 1,
2005, those living in the Northeast will be eligible. All that is required
to receive a copy of your credit report is to answer a few simple questions.
Since it only takes a few minutes to do, there is really no reason to put
off checking your credit report, and you may benefit tremendously by doing
The credit score is a single, three digit number that represents an
individualís credit worthiness, and that score is obtained through a complex
formula that takes into consideration a personís borrowing and spending
habits and payment history. A high score makes someone more eligible for
loans and credit, while a lower score may indicate that a person is a risk
to repay. While the information contained on a credit report is generally
accurate, incorrect information sometimes shows up on credit reports, and
incorrect information could result in someone who being denied a loan for
which they might otherwise be qualified. Furthermore, a credit report check
is the best way to determine if you have been the victim of identity theft,
an increasingly popular crime that often goes unnoticed for a year or more.
If your identity is stolen, your credit rating can be ruined and you can be
burdened with thousands of dollars in debt. The new bankruptcy law, which
goes into effect in October 2005, draws no distinctions between debt
incurred by an individual and debt incurred through identity theft. This
alone should be reason enough to check your credit report regularly.
Since the law now allows individuals to obtain one free report per agency
per year, anyone who wants to keep a close eye on their credit report can
obtain a free report as often as every four months. Since the credit report
affects your life in so many important ways, checking it regularly should
become a habit.