Consumer Credit Report
Your Consumer Credit Report is available for all the world to see. Anytime. Anywhere. Anyone can read it by just a click of a button. Not just one, but three different credit reports tell your financial story to the curious. Imagine all the things it tells the world about you. Does it tell the right story about you? Not certain what story it is telling the world? Is it important for you to know? Absolutely. Why?
If you are like most Americans, your first credit card, not your first car, is your rite of passage to adulthood. Credit cards have become just a normal means of purchasing the random things that define your everyday life. When it comes to paying your bills, big or small, the credit card works just fine as well.
So after you start using your first credit card, within about six months, you will have your own consumer credit reports. Congratulations. You are now part of the financial system. You are a consumer of credit services. To help you understand the importance of your consumer credit report, we provide you an overview of what it is, what it tells anyone who wants to know, and what it means for your life.
What Is Your Consumer Credit Report?
Whenever you have requested credit from a lender, for whatever reason, that is noted in your consumer credit reports. Each payment or non-payment that you have made to a creditor is recorded in your consumer credit reports.
Credit Report Data Lasts
Let’s be clear. All of your credit activities are retained for a period of at least seven years before rolling off. That late payment three years ago when you were traveling. It’s there. That credit card application five years ago? It’s there as well.
In the eyes of a potential lender, employer, car dealership or anyone who wants to know more about your character and behavior, your credit report pretty much defines you. You think social media is revealing? Think again.
Consumer Credit Report Contents
All consumer credit reports contain the same four categories of information.
Your name, address, Social Security number, date of birth and employment information. This information is NOT used in calculating your credit score.
Your credit accounts, organized by type (bankcard, auto loan, mortgage, etc.), date opened, credit limit or loan amount, account balance and payment history.
Requests for your credit report within the last two years. There are two types of inquiries: hard inquiries and soft inquiries. A hard inquiry is when a lender or third-party checks your credit report or score when you apply for credit with them. A soft inquiry typically is when your credit reports and scores are pulled without you applying for credit. For example, when a credit card issuer sends you a pre-approved offer, or when you request your own credit reports. Your credit scores only consider hard inquiries.
Delinquency information from missed payments that have been reported by lenders. This also includes information on overdue debt from collections agencies, and public record information (bankruptcies and foreclosures).
By law, information reported about you to the national credit bureaus must be fair, accurate, relevant, substantiated and verifiable. Unfortunately that is not always the case. So, while the credit bureaus are in the business of providing accurate credit information to their customers, they are dependent on the quality of information provided to them.
Credit Report Errors
A recent Federal Trade Commission report found that 21 percent of American consumers had a confirmed material error in at least one of the credit reports issued by the three credit reporting bureaus. A confirmed material error involves information that, when corrected, changed the consumer’s credit report.
You may be in this group. How to find out? You can annually request and review your credit reports for free.
Credit Report Repair
If you do find errors, you should obviously fix them. The importance of fixing errors on a credit report is that they will result in lowering your credit score. This can prohibit you from taking out loans, getting a credit card or securing any form of lending.
The consumer credit repair process can take time.
Why Is This Important To Me?
Well, based on the quality of information in your credit reports, this information is then used by the two major credit scoring companies to calculate your credit scores. These credit scores are used by any potential lender as a predictor of your consistent, on time repayment of credit debt. They simplify and summarize your credit reports data to a commonly accepted and understood credit quality number range (excellent, very good, good, fair and poor)
How It Impacts You
Looking to get a low interest credit card? Time to consider a new auto purchase and need a loan? Want to get that home mortgage loan before the rates go up? Your credit reports data and resulting credit scores will determine whether you get approved for that loan and at what cost.
Note that the financial credit models that the credit scoring companies use do not consider any personal information of the debtor. In that sense your credit score is completely transparent and impersonal. Right or wrong, good or bad, your credit score determines your credit worthiness.
Your consumer credit reports provide a detailed history of your financial life. Anyone who wants to see just needs to push a buttom. For creditors it will determine whether you get approved for credit and at what cost. When applying for employment, it provides a perspective of your responsibility, trustworthiness and maturity, particularly if the job position involves finances. For your life and family, your consumer credit report may define the range of options that you have as it is related to credit options.
An overview of consumer credit report is presented. This includes 1) What Is A Consumer Credit Report; 2) Consumer Credit Report Contents; 3) Consumer Credit Report Accuracy; and 4) Why It Is Important.
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