Your Financial Future Depends on Your Credit Report
November 20, 2009 by James Strathman
Filed under Credit
What is a credit report? Well in simple terms, it is documentation of your credit history. What type of information is found on a credit report? Any type of loans of credit card accounts, balances for each account and an accurate record of how often you make your payments. If you don’t make your payments by the due dates, any future companies that you request credit from will be aware of this information by reviewing your report.
A consumer reporting agency (CRA) is responsible for gathering and selling credit information about people to other companies. The CRA will collect information about your credit activities, store the information in a network database system and proceed to charge a fee for providing this type of information to others. A credit bureau is the most widely known type of CRA and consists of three major divisions that operate around the nation.
How exactly is your credit score computed? Well, there are a number of factors that are taken into consideration such as your borrowing habits, charging activities, and your ability to pay back what you have borrowed in monthly installments, on time. Keep in mind, a strong credit score will assist you when it comes time to reach financial goals that are larger such as financing your first home. Consequently, if your credit score is low, you may face financial barriers when it comes to requesting different types of credit.
Only specific requestors can gain access to personal information through credit bureaus; this is put into place for security purposes. Any company who is considering extending you a line of credit or who has granted you credit in the past can request information from your credit report, potential employers and current employers, insurance agencies, government agencies such as a student loan lender, and anyone who has a business need for that type of information such as a potential landlord.
Accounts on your credit report are listed by type of loan-such as a mortgage, student loan, revolving credit, or installment loan; the date you opened the account, your credit limit or the loan amount, co-signer information for the loan-if applicable; and your payment pattern over the past few years. The company that you are asking to lend you money will ultimately make the decision about whether or not to grant you credit. The credit bureaus only supply the necessary information about your credit history for others.
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