What is a Credit Report
A credit report details the credit an individual has been awarded, including home mortgages, automobile loans and credit cards. Credit reports list the details of each account, including the credit line or the amount of the original loan, how much is owed, the monthly payment and the payment record.
In addition to cataloguing credit accounts, a credit report lists personal information, collections or negative account information and details about any judgments that have been entered against the individual. A list of the companies that have requested a look at the credit report will be presented in the inquiries section as well.
Anyone who has owned a home, purchased a new car or held a credit card will likely have a credit report on file with one or all of the 3 credit reporting agencies, TransUnion, Equifax and Experian. Most adults have a credit report on file with all 3 credit reporting agencies. A credit report is used to tabulate an individual’s credit score; Fico scores can range from a low of 350 to a high of 850. The higher the number, the better the credit. Many mortgage and auto lending programs require a minimum score of 600 for approval; some have more stringent requirements.
How to Get a Credit Report:
The Fair Credit Reporting Act entitles each citizen to an annual free credit report from each agency, and checking a yearly credit report allows a consumer to find and act on errors quickly. Since a credit report has a direct impact on an individual’s Fico score, making sure the information it holds is correct is the best way to protect that score. A high Fico score will help a consumer get better interest rates when applying for mortgages and loans, and may help secure better rates, like auto insurance.
If a consumer has already received an annual free credit report in a given year, they are also entitled to get a copy of their report if they have recently been denied credit. This process can be done by contacting whichever of the 3 credit reporting agencies that issued the report the decision was based on and requesting a free copy of the report.
Manage a Fico Score:
A consumer should read through the credit report from each agency and make sure all of the included information is correct. If derogatory items that are incorrect are found, they can be disputed; the credit reporting bureau is required to remove inaccurate information. Information can be disputed online or by sending a letter through the mail.
Negative information entered on a credit report will remain for seven years, unless it is disputed. Some types of bankruptcy can remain on a credit report for up to 10 years. Disputing an item will not automatically remove it from the report; the person or entity listing the derogatory information needs to prove the debt is owed. If they are able to prove the debt is reporting correctly, the item will remain. If the creditor can’t prove the debt is correct, then the credit reporting agency is required to remove it.
The best way to manage a Fico score and make sure it is as high as it can be is to monitor all three credit reports and watch for negative information. Building a solid history of on-time account payments will help boost the positive aspects of a credit report, and in turn boost the Fico score.