A credit report is a compilation of the history of all commercial credit transactions you have entered, going back a certain number of years, as well as certain public records A credit report is used to determine your credit worthiness. Credit reports will also show certain individuals or companies that have made inquiries as to your credit worthiness. It will also contain personal information, such as your name, address previous addresses, Social Insurance Number, telephone, birth date, employment.
These reports are compiled by the two major credit reporting agencies in this country, Trans Union and Equifax. These two agencies retain reports on millions of people throughout the country. The information used in the reports is supplied by creditors and others who have inquired as to your credit history.
Once the information is compiled, an evaluation of your credit history is made, and a formula is calculated to determine your credit score. Your credit score is then used to determine whether a bank, loan company or merchant will extend you credit, and if so, on what terms. They may also be used by prospective employers, landlords who may lease property to you or anyone else who may consider extending credit to you.
OBTAINING A COPY OF YOUR CREDIT REPORT
Only you and those to whom you give permission can review your credit report. However, most commercial businesses offering to extend credit, and all banks, will ask to review your credit report as a prerequisite to obtaining a loan. You can obtain a copy of your credit report from a number of sources, including directly from Equifax or Trans Union.
Keeping your credit report accurate is extremely important, since it directly affects both your ability to obtain credit and obtain the most favorable terms possible. Obtaining a copy of your credit report should be performed on a periodic basis, at least annually. You are entitled by law to obtain one free copy of your credit report each year. When you review your credit report, be sure to determine if the information is reported accurately. You will be given a form to make any corrections to your report, which should be sent to the credit agency.
WHAT YOUR CREDIT REPORT WILL SAY
After showing your personal information, the report will show the number of credit accounts you have, or had, the type of accounts, whether any are current or delinquent, and if delinquent at any time, how many days it was reported delinquent. After providing a summary of all accounts, it will provide a history on each account.
If you have a charge card account with a $5,000.00 limit and a $2,000 balance, the report will show the name and address of the creditor, the present balance on the account, the high balance since the account started, current payments, and if the account was ever more than 30 or longer days past due, and if so, how frequently the account was past due. It will show that your credit limit is $5,000 and that the present balance is $2,000 as of the date of the report, or when the creditor last reported a payment to the credit agency.
Old accounts may appear on your credit report, even though they have been paid off. This is because your credit report is not only a current snap shot of your credit, but a historical picture as well. Old accounts may stay on your report for as much as 6 years from the date the account was paid off. This is also true of public records, such as judgments, bankruptcy, or taxes. The report will then show who has made inquiries on your credit report. Finally, your report will show your final credit score, along with an explanation of how this score was calculated.
At First Foundation, obtaining an accurate credit report is vital to our service to you, our customer. We may be able to assist you in locating potential errors in your report and increasing your credit score.
If you are interested in learning more about credit report, please feel free to contact us today!