Why Would You Need to See Your Credit Report?
Your credit report is like your identity in the world of finance. It is like the gate pass that one has to show at the entrance of the money market. If you fail to show your pass, your access will be denied.
A good credit report helps you obtain more credit as well, so goes the saying, “wealth attracts wealth”. A person with a healthy credit history might not be synonymous with a person of plenty of wealth. As mentioned earlier, a credit report is the permit to receive credit; it is the token that shows how reliable you are when money is the matter.
If you cannot prove yourself to be reliable, creditors won’t be willing to lend you money. Hence, you should try hard to attain better credit and must adopt all precautionary measures to protect it from undue damages. Wise men say “an ounce of prevention is worth a pound of cure”.
What Factors Affect Your Credit Report?
But how can you do so, if you have no idea about the controlling factors of a credit report? What are the variables that influence it? Do you know how fragile your report is? Credit is very much prone to damages – wait, don’t get nervous. You need not be an expert to answer all these questions. Only some basic knowledge is required that can help you manage your credit on your own.
A credit report is a document that includes the individual’s financial history of the last 10 years with borrowing and repaying habits and bankruptcy details, if any. Generally, creditors report your account to the Credit Reporting Agencies. These agencies maintain files for each individual. Once they get the account information for a particular person, they enter the data into his or her file.
Based on your credit history, CRA assigns you a three digit score that is the yardstick of measuring your creditworthiness. Sometimes creditors introduce their own formula for calculating credit scores. But whatever may be the system, data used in the process of calculations are compiled only from your report. So, if you have a healthy report with no blemishes, you need not worry about your score, as it will definitely be in the upper range.
Maintaining Your Good Credit
Once you manage an appreciable credit score, there comes the question of maintaining it, because a credit report is prone to injury. It can be damaged if it reflects -
- Negative information or;
- Wrong information
As far as negative information is concerned, the consumer is responsible for it, directly or indirectly. If you fall behind with your payments for some reason or other, your creditors will report it to the bureaus, and your report will begin showing it thereafter. Needless to say, your future creditors will not like a delinquent account because it raises doubts about your consistency with payments.
Generally speaking, charged off accounts, accounts under collection, settled at a lower amount, bankruptcy – these statements are considered to be negative and it will hamper your score. One should be careful to remove these entries and may go for professional help if required. The process of credit repair requires you to be patient and disciplined.
As far as wrong information in your report is concerned, it can be of two types –
- A CRA can make mistakes while processing your report;
- Creditors can report wrong information about your account by mistake.
These mistakes are rectified by Credit Bureaus on a request from the consumer. The Bureau will carry out an investigation and make suitable corrections if any erroneous information is in your report.
Beware of Fraud in Your Name
There could be another source of erroneous entries, though! If you suddenly see lots of defaulted and unpaid accounts in your report, you may be a victim of identity theft. If you have lost your personal information in the near past, be alert. Exercise all preventive actions to protect your credit history. File a report with local police and contact Credit Bureaus to place a fraud alert. It will help you erase fraudulent entries from your report in the future.
I would like to conclude by saying everybody should check their credit report regularly. It will help to arrest the negative or wrong information at the earliest and can save a lot of time, money and energy in the future.
