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Credit Report Basics

August 25th, 2008 Subscribe To Our Feed

Credit Report Basics

The Credit Reporting Agencies operate with lenders, creditors, insurers and employers to collect information from them and share it with companies with whom you desire to do business. Here’s an representative of how the system works:

A) When you apply for different credits the creditor requests a copy of your financial history from at the least one credit reporting agency. This causes a “hard inquiry” to be registered on your credit report.

B) The creditor exercises your credit reports and scores along with income, debt and other information to set what rates to offer to you.

C) You start to utilize the new credit and the creditor report your payment history to one or more of the credit reporting agencies every 30 day period.

D) The credit reporting agencies update your credit report as they obtain new information (positive and negative) from those of your creditors.

E) Your credit profile changes based on your financial activeness.

Your Credit Report And How It Is Broken Down

Your credit report is divided into six main sections:
1) personal information (name, date of birth, last reported address,
2) any previous addresses on file,
3) the name and address of your current employer,
4) any previous employers that have been reported as well as any consumer statements you add to your file; summary; inquiries; creditor contacts; account history; public information.
5) When you open a new account, miss a payment or move, these sections are updated with new information.
6) The old information will stay on your credit report for several years.
Not all creditors report to each of the three agencies and the agencies don’t share their data so your credit reports from TransUnion, Equifax and Experian could be substantially unique from each other. That’s why it’s important to check your three credit reports every few months to ensure that the information is precise and actual.

Constantly Check For Inaccuracies That Need To Be Adjusted

Under the Fair Credit Reporting Act, consumers are protected from experiencing incorrect information on their credit reports. If you see an inaccurate record on your credit report, many identity protection agencies supply you with the tools and information to aid you in disputing it. Verify the disputing section on those sites for less told information about disputing items on your credit report. You can likewise dispute the inaccuracy direct with the credit reporting agencies.

Make Sure To Be Diligent

I recommend that you check your credit reports every 3-6 months in order to defend against inaccuracies and identity theft. Routine check-ups along with paying your bills on time, preserving your credit card balances below 50% of their limits and righting any inaccuracies may help you to keep a healthy credit profile.