A consumer credit report is a factual record of an individual's credit payment history. It is provided for a purpose permitted by law, primarily to credit grantors. Its main purpose is to help a lender quickly and objectively decide whether to grant you credit. Examples of credit include car loans, credit cards and home mortgages.
View your credit information as reported by the 3 major credit bureaus listed below.
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What's on my credit report?
(source: www.gemoney.com)
Companies that loan money look at your credit report to determine if you will pay it back on time. This is why it’s important to look at your credit report to make sure it doesn’t have any mistakes. And if you have a bad credit history, paying on time can improve your credit report and your credit rating.
Information on your credit report comes from companies that have loaned you money. National credit reporting agencies, also known as credit bureaus, organize the information and keep credit reports on file. Credit reports will also list public record information such as tax liens and bankruptcies.
How can I check my credit report?
You have the right to order copies of your own credit report. There are three major credit bureaus, all of which may contain different information about you. Thanks to a new law, you can receive one free copy of each of their credit reports every year. You can also get a free copy of your credit report if you have been denied a loan.
What’s a credit score?
A credit score is a number that summarizes the credit information reported about you. This number can change as the elements in a credit report change. This number tells a lender how likely you are to repay a loan, or make credit payments on time. A higher score means a better chance of having a credit or loan request approved.
There are many different credit scores used in the financial service industry. Scores may be different from lender to lender (or from car loan to mortgage loan), depending on the type of credit-scoring model used. All credit bureau scores and lender credit scores are not the same. A credit score used by a lender to make a decision around a home loan may have different information or be weighted differently than a credit score developed to be used for credit card offers. Many lenders develop models that are then kept as “trade secrets” - they will not share the specific “recipe” with anyone.
Credit scores are based on information contained in your credit report. Therefore, it is very important that your credit report be accurate because your credit score will change as your credit report changes. For example, if you stop paying a loan, your credit score will go down or if you begin paying all of your bills on time, your score will increase.
Good credit history
The better your credit record is the more likely you are to get a loan at a lower price with good terms. Good credit can help you get utility service or a cell phone without a deposit, get a lower rate on insurance, get a job or an apartment. It’s become more common for landlords, employers, and others look at credit reports before renting an apartment.
Not-so-good credit history
If you only have an OK credit history, you can still get credit. But it will probably be at a higher interest rate. Most companies now determine the interest rate based on how risky they think you are. This judgment about risk is based on your credit history – the more you have missed payments in the past or defaulted on a loan, the higher your interest rate will be.
Poor credit
If you have a poor payment history, it is hard to get credit. If you do get credit, it will generally be at higher interest rates or with high fees. This could add hundreds of dollars to a mortgage payment or even to your credit card payments. Secured credit cards (where you deposit a certain amount and then use the card and use that deposit) or “credit builder” loans (where you deposit money into a certificate of deposit and then take out a personal loan against that amount) may be good options for you if you are rebuilding your credit.
No credit
Some people do not have a credit history. If you are just out of high school or college or if you are a new immigrant to the US you may not have had the opportunity to borrow money before. If want credit but have never used it before, you may be able to use other kinds of payments to develop a credit rating. For example, lenders may look at regular payments of rent, utility bills, child support and other large expenses to see how you’ve managed your bills in the past
