A credit report is a comprehensive statement that encompasses all information regarding personal account credit information, that will be provided by all businesses you have patronized. This report will cover everything ranging from payments made, to loans taken.
Checking credit report should be at the top of the list when it comes to all matters finance, but surprisingly, the majority of the populace do not even bother with this process. In fact, up to 35% of people have never gotten a credit report in their lives; a stat which is surprising given how much effect good and bad credit score can impact one’s life.
It should be noted that credit score and credit report do not essentially mean the same thing. A credit report is essentially the background and present information of everything concerning your credit, while a credit score is a mathematical representation of the information contained in the report. There are good credit reports and bad credit reports. A good credit score is usually attributed to the upper quarter of the ranking scale while bad credit scores are given to those who fall in the bottom quarter of the scale rank.
Effects of Bad Credit Report
- Loan – A bad credit means that financial institutions will be less inclined to give you a loan as bad credit reflects a lackadaisical attitude towards finances; and even in a case whereby the loan is given out, the interest rate will be higher that of someone with good credit.
- Missed Employment – to most businesses, responsibility, and hard work are key values that members of staff should possess, which is why hiring someone with a low credit score is not what most businesses are interested in.
- Having bad credit also means that there would be bills piled up to be paid, and the interests growing on those incurred debts would continue to increase, further impoverishing and decreasing credit score.
- Bad credit will also affect living conditions. If you are looking to move into a new building, a landlord who requests your credit report would not be inclined to house a person who currently has debts he or she has been unable to settle.
Information Contained on a Credit Report
The establishments that deal in credit reporting all provide a slightly different arrangement of information, but all must contain the following 5:
Personal Info – comprising of name, date of birth, current and previous home and office addresses, and social security number.
Account Info – this entails all credit card history, account transaction history, both outgoing and incoming payments, loan history, and how long it took to pay off the loan given income, and account history.
Public Records – contains all information from premature foreclosures, to heavy debts, and tax liens.
It will also contain information about the list of people and financial institutions that have recently inquired into your credit information.
The good news is, you don’t have to suffer from bad credit because aside from the free credit report every individual is entitled to every year, there are also agencies that one can request from. These agencies are mainly country-specific, so this piece will only cover American and United Kingdom report agencies
The Major Credit Report Agencies in the United States of America and the United Kingdom
The recognized and government-approved agencies around the globe are TransUnion, Experian, and Equifax.
- TransUnion – headquartered in Chicago, Il, it is one of the nation’s recognized credit reporting establishments. It is the smallest among the trio, with barely 5,000 workers nationwide, over 60,000 separate different branches, and handling up to 1 billion customer’s information across 4 continents.
- Experian – Although this establishment is not native to the United States, it is by far the biggest of the lot in terms of size. the Experian is a major credit report firm, with almost 20,000 workers, 30 million running business ventures, and has almost 900 million subscribers worldwide, but over 200 million customers in the US only; operating in about 40 different countries.
- Equifax – native to America, Atlanta to be precise, this organization has the least international reach, with almost 10,000 members of staff, over 800 million customers worldwide, but 230 million based in the US, and 90 million different business ventures.
Each establishment employs its own techniques to create the report, and each uses a different grading system; with some giving ratings over 10 and others giving ratings over 100. Every individual is privy to the information contained in their report and is allowed the liberty to challenge a report or score that they feel is undeserved of their credit activity.
The person who feels hard done by the agency in charge of providing his or her credit information should take immediate action against it by writing a dispute letter to explain the issues he/she has noticed in the report. The resolving process usually takes roughly a month to be fully done and then a re-evaluation will be carried out should the establishment have made a mistake.
The importance of a good credit score cannot be overstressed. Good credit can help smooth a lot of transactions along well, especially if an individual is looking to start their own business, ensuring that they are eligible to receive loans from financial institutions at lower interest rates, can easily garner funds from potential investors looking to buy into their business idea, or even other firms that may provide some of the materials that you may need to start up can deliver on credit, given the obvious financial responsibility.
Credit reports are very easy to get, with all the approved firms having online services for registration, scheduling, and reporting of reports; with you not requiring to be physically present at the office to get a schedule and get a report.
The reports can be scheduled annually, semi-annually, quarterly, or monthly, depending on whatever system the user chooses. There are also tips and suggestions contained in some reports on how to improve a bad credit report or maintain an already good one.