Credit Reports
What is a Credit Report?
A credit report is a comprehensive record of a person or businesses’ credit activities. The report will list loans, credit card accounts, balances and frequency of payments. It will also indicate any collection actions that have been taken as a result of unpaid bills.
There are three major agencies that issue credit reports: Equifax, TransUnion and Experian. However, the credit reports from these three agencies are likely to contain some conflicting information. This is why it is usually suggested that consumers obtain credit reports from all three agencies. The reports can be collected on an annual basis in order to determine their accuracy. Errors should be reported to the appropriate agency for correction.
Credit reports are divided into four main parts:
• Personal Profile
• Credit History
• Public Records
• Inquiries
Parts of a Credit Report
Personal Profile
The first part of the credit report, located at the top, is the consumer’s basic information. This will include; full name, previous and current addresses, employer, date of birth and social security number. The name of the spouse may also be included. There may also be different variations of the name listed on the report. This can happen when a name is incorrectly recorded by a creditor. This form of discrepancy will usually remain on a credit report. However, taking note of the address is important. An incorrect address may be an indication of identity theft.
Credit History
The credit history provides an itemized list of accounts that are both current and closed. It will also provide information on the account balances and any arrears. The name of the creditor will be listed along with the account number for each bill. The account number is sometimes partially obscured for purposes of security. The debts listed will include items such as credit cards, home mortgages, medical bills and car loans.
The nature of the account will also be identified. These designations will include: Individual, Joint, Authorized User, Undesignated, Maker, Terminated, Shared or Co-signer. The date that the account was opened will appear along with the account history. The maximum credit limit allowed will also appear. The column for “Terms” will indicate the remaining number of instalments on an account.
The two types of accounts indicated are “revolving” and “installment”. A revolving account, such as credit card debts do not have a fixed ending date. An installment account, such as a car loan, will have a specified ending date.
Debts that have been given over to a collection agency will also be shown. This will include the date of reporting and the name of the collection agency. It will also indicate the original lender and remaining balance on the account.
Public Records
The reports for this section are obtained from federal, state and local courts. Items reported are tax liens, monetary judgements and bankruptcies. These items will reflect negatively on the overall credit score and will remain for seven to ten years on the credit report.
Inquiry Section
The inquiry section will indicate parties that have received a copy of the credit report within the last two years. The two types of inquiries are “hard” and “soft”. A loan or credit application in which the consumer requests a copy of the credit report is a hard inquiry. Soft inquiries come in three types; current creditor monitoring, promotional credit offerings and consumer credit bureau inquiries. The soft inquiries will only show up on credit reports provided to the actual consumer. Two or more hard inquiries that come within a 14 day period are counted as only one inquiry.
Credit Score
Credit scores can also be listed in a credit report. The credit score is a calculation that indicates the likelihood of a loan repayment. The credit score will be a three digit number that ranges from 300 to 850. The higher the number, the more likely it is assumed that a debt would be paid. In addition, a good credit score may be used to negotiate for a better interest rate on a loan.