Credit Report 101: Everything That You Need To Know

Your credit report is a document that shows your credit history including your personal information, credit accounts, payment history, and relevant information from public records such as those pertaining to bankruptcies, judgments, and liens.

A credit report is basically your report card that tells the whole world how well or how bad you are managing your finances. If you have been doing a great job then you will most likely see a high credit score while you will see the opposite when you’ve made some wrong decisions along the way. By wrong decisions, we mean late payments, repossessions, collections accounts, among other things that might put you in bad light.

However, the credit reporting system is not a perfect system. There’s a certain probability that there will be some items on your credit report that should not be there.These items may pull your credit score lower. You have all the right to dispute these items by yourself or you can hire a credit repair company to do it for you.

Credit Report 101

Why An Accurate Credit Report Is Important

Your credit report is not just a record or a piece of paper. It has a huge impact on how you live your life. Your credit report will dictate how different businesses and institutions will deal with you. If you have a bad credit score, expect higher interest rates when you have mortgage or car loans, expect higher insurance premiums, and expect potential employees to think twice before hiring you.

The three credit bureaus — Equifax, TransUnion, and Experian — receive information from banks, lenders, merchants, utility companies, landlords, among others on a regular basis. Information from these parties determines your “grade” or your credit score.

These credit bureaus are also depended upon by these institutions when they process your application for loans or before they rent out a property to you or before they approve your insurance. They give these institutions you deal with a snapshot of your current financial situation so they can make an informed decision on how they can properly deal with you.

Unfair Credit Reporting

Since there’s a certain degree of possible error in credit reporting, the different laws and policies that serve as foundation of credit reporting protect consumers and individuals like you from unfair credit reporting.

If there are mistakes on your credit report, the law ensures that you can contest such errors so corrections can be made. When you dispute erroneous items on your credit report, the burden of proof is on the business that claims of negative record.

When you, or when a credit repair company you hire, complain about an inaccurate record, the business in question will be required to present evidence. If the business cannot present proof, then the credit bureaus must delete the listing from your credit report.

Aside from good financial habits, you must make it your responsibility to actively participate in the process of credit reporting by making sure your credit report is accurate.

In case you see an error on your credit report, you have all the right to question the inaccuracies. If you do not have the time and patience to do it, credit repair companies can be of great help, for a fee, of course.

Your credit report is your report card that tells lenders and potential employers your financial habits and if you will be an asset or risk to them. Let help you undertand credit reports and credit repair services.