Understanding Your Credit File
1. What is a credit report?
2. Who can view your credit file?
3. What kind of information contained in your credit file?
4. How the credit reporting agency described your payments history?
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1. What is a credit report?
Like millions of others, your credit history are maintained by at least one of the three credit reporting agencies in the US: Equifax, Experian and TransUnion. These documents are called credit reports. A credit report is an overview of your credit history. This is one of the main tools lenders use to accept or refuse to grant a loan or credit.
From the information in the credit report, the bureau determines a credit score based on five major factors. Here is how the weighting breaks down.
2. Who can view your credit file?
You have the right to read the contents of your credit report. No one else can access your credit report unless you allow it. Usually when you sign documents such as loan applications or credit card, you authorize the issuing organization to check your credit history. The credit bureaus will disclose the information in your credit report to anyone who received your permission and only if the request relates to the credit, collection of a debt, leasing a house or apartment, or an application for employment or insurance.
3. What kind of information contained in your credit file?
Your credit report contains information regarding your personal financial situation past and present.
Personal Information: This is information such as your name, current address and your past addresses, your social insurance number, telephone number, date of birth and your current and past employers.
Information about your credit: This is information about the credit that you may have obtained, for example a credit card or a department store card , a line of credit, a loan or mortgage.
Banking Information: This is information about your accounts, including checks “Non-sufficient funds” ( NSF) you may have made.
Public Records: Any information in the public domain such as: Bankruptcies, tax liens, or judgments from federal, state, or court records
Prior Delinquencies: Dates account was last reported delinquent.
Consumer Statement: Any statements you may have made to explain a given situation, such a dispute with a financial institution or a fraud alert.
Inquiries regarding your application: This is a list of persons who made inquiries about your credit situation: yourself, a lender or other authorized institution.
4. How the credit reporting agency described your payments history?
The credit reporting agencies describe your payments history in various ways.
Using a rating
Some credit reporting agencies show the assessment made by lenders to each of your credit items using a scale from 1 to 9.
A rating of “1″ means that you pay your bills within 30 days of the due date.
A rating of “9″ means that you stop paying your bills or have submitted a proposal for debt relief to the institution you have a loan.
A letter also appears before the number: for example I2, O2, R2. The letter is the type of credit you have.
“I”means you were given an installment credit, such as a car loan, you borrow money once and you pay it back with a fixed amount at regular intervals over a predetermined period, until the loan is repaid.
“O”means that you have open credit such as a line of credit, you borrow money, if necessary, up to a certain limit and the total balance is due at the end of each period. This category may also include student loans for which the money is due only after your graduation.
“R”means that you got a “revolving” credit, you pay money regularly pouring in varying amounts depending on your account balance, so you can therefore borrow money up your credit limit. Credit cards are good examples of “revolving” credit.Each creditor will issue its own rating for individuals. For example, you may have an R1 rating with Visa (the highest level of credit rating). The prevailing trend is to move away from this multiple rating scale toward the single digit FICO score. Nevertheless, here is how the scale breaks down:
Using a graph
This chart shows your payment history over the past two years.
Using a scale
This scale indicates the number of times you have paid your bills 30, 60 or 90 days after the due date.
How to maintain good credit history?
Several options allow you to establish and maintain good credit history.
Here are some tips.
Do’s
— In order to avoid misunderstandings between you and your credit card company, accept and sign once you have fully understood the contract.
— Pay your bills in full and before the due date. If you can’t do, pay at least the required minimum amount shown on your monthly statement.
— Do not exceed your credit limit.
— Contact your creditors if you have trouble making payments.
— Make sure your monthly statements do not contain errors.
— Do not wait to report unauthorized transactions.
— Contact the issuer immediately if your statement reported any purchases you did not make.
— Read the statements and other documents your credit card company send you. Stay informed of fee increases and changes to conditions attached to your credit card.
— Obtain a copy of your credit reports by contacting the three credit reporting agencies at least once a year, and make sure they contain no errors.
— Deal with companies you know and whom you trust.
— You think your credit score should be higher? First, make sure that the information in your record is accurate.
Factors most likely to affect your score.
Here are some tips:
— Pay all your bills on time. Although the payment of utility bills such as telephone, cable and electricity, is not included in your credit report, some cell phone companies can report late payments to credit reporting agencies, this could hurt your score.
— Pay off debt as quickly as possible.
— Keep your balance at a level well below the limit. The higher your balance, the higher your credit score will be affected.
— Reduce the number of credit applications you make. If too many potential lenders ask about your credit in a short period, your score can suffer.
For cons
— The fact that you ask information about your own credit report does not affect your score.
— Finally, make sure to have a credit history. In fact, you can have a low credit scores simply because you never have contracted loans and demonstrated your ability to repay.
For more information:
To see what a credit report or credit score looks like from: TransUnion, Experian and Equifax, to learn how many years after the information is removed, or how to correct errors, see the publication Visit: ftc.gov/bcp/edu/microsites/freereports
