What is a Credit Report?
You may have an idea what a credit report is – but do you really know? It’s very common for consumers to confuse credit reports with credit scores. Even though the two are related (and both are very important), they are two different things.
Credit reports are compiled by the three major credit reporting agencies Equifax, Experian and TransUnion. If you’ve had credit in the past, you probably have a credit report. (These reports are often called “credit files” or “credit histories” as well.)
Credit reports include key identifying information such as your name, current and former addresses, your employer (if it’s available), credit card and loan payments, inquiries, collection records and public records such as bankruptcy filings and tax liens. Each account listed will show your payment history along with other account details like your credit limit, when the account was established, the type of account (installment, revolving,), etc.
Here are seven important facts about credit reports:
1. They don’t “judge” your credit. These reports are simply a compilation of the facts that credit reporting agencies have collected about you. It’s up to the lender to decide what’s “good” or “bad,” which is why they often use credit scores as well. .
2. They can change often. Credit reports are for the most part compiled when they are requested. The credit reporting agency will search its database of information and compile the report based on the latest available data.
3. The three major CRAs are private, for-profit companies and they don’t share information with each other. That means there can be a mistake on one report but not another.
4. The information in your report is used to calculate credit scores. If the data is wrong, the score may not accurately reflect your creditworthiness.
5. You are entitled to one free annual credit report from each national CRA. In some states, and in some circumstances, you may be able to get additional free copies.
6. Lenders aren’t required by law to report information to credit reports. Some companies, such as utility companies and cell phone providers, typically do not report.
7. You have the right to dispute mistakes on your reports under a federal law, the Fair Credit Reporting Act. If you ask for an investigation, the CRA or creditor who receives your dispute must investigate and respond within 30 days in most cases.
Who sees your credit reports?
The list of organizations who can view your credit report is a limited one. It includes:
- Potential employers
- Insurance companies
- Certain government agencies
Where’s My Credit Score?
You won’t receive a free credit score when you get your free annual credit report. However, there are other sources that will give you a truly free credit score, such as Credit.com. The credit score takes information from the report and evaluates it to predict whether you are a good credit risk or not. A high score means you’re a good candidate to pay back a loan on time. A low score means you have a history of not doing such a great job of paying back your debts, or you have a limited track record with credit, and are therefore more risky.
Your credit report is essentially your financial resume. It’s up to you to make sure it is accurate, and to maintain positive references. Your financial future may well depend on it.
Read the original article by Geri Detweiler for credit.com here.