Credit Report
There are times in an individual’s life when he faces a financial crunch. It may be a student who needs a loan or an individual who might need a new house or a new car. For that he approaches various financial institutions for a loan or a credit .When a person files an application, the financial companies investigate about his financial credibility, which is decided by his financial history. If a person has a bad history, i.e. if he has delayed in paying his mortgage, or if at any point in time he has filed for a bankruptcy or has been denied a credit card, all these facts will be compiled, in his credit report. In other words a credit report is the certificate of a person’s credibility.
The person is then given a score, which is a determinant of his credit worthiness. It warns the financer of the risks involved in offering credit to this individual . For instance if he has considerably delayed the payment of his bills, he will be offered credit at a very high rate of interest and if he has a poor history of payment he may be even denied a loan.
What does a credit report contain
In other words credit report compile all the information about your reputation of bill payments, your debts and your financial holdings, which helps the financer in deciding the risk factor involved in dealing with you.
While compiling a consumer’s credit report, there are other factors besides these which are taken into consideration. For instance the manner in which he controls his debts, whether he lives within his means, whether he is spendthrift . His holdings are also taken into consideration, to decide his stability .
Credit report include all the information about the individual who wishes to borrow money. His personal details, his name, date of birth, the details of places where he has served, the names of his past and present employers and similar details of his spouse. It includes the details of all his financial transactions, his account details, his loans , mortgages, the details of his installments, etc
How is this information gathered
All this information is gathered by consumer reporting agencies from credit bureaus.
Credit bureaus contact all those agencies which have offered him credit earlier, for instance a bank which has extended personal loans to him or a departmental store which gives him stuff on credit. On the basis of this information the lenders decide whether it is safe to give him credit. Before applying for any kind of loan or credit, it is always advisable to secure a copy of your credit report to avoid any kind of confusion.
To err is human. At times certain errors regarding identities of consumers or some information which is not relevant at that time, may be found in the credit report, although it is not deliberate yet it can have serious repercussions What if an error occurs.
Whenever such an error occurs, it should be immediately brought to the notice of the credit reporting agency. The data is then corrected by them, a process which may take around 45 days. The updated report is then sent to all the concerned parties, on his request. In cases of dispute where the consumer reporting agency refuses to alter it’s report he can approach the credit bureau, and give them a brief statement clarifying the inaccurate details in the report.
If after seeing his credit report the moneylender denies to give him credit, he should have enough reasons to do so . He should also provide the details of the credit bureau which gave that report, to the customer. The credit bureau is bound to share all the information which is in the report, also revealing the sources from where this information was gathered.
If there are discrepancies in his credit report regarding his payments which he has either missed or delayed, the chances of approval of his credit may be affected.
How is credit history information obtained
The credit history information of any individual is maintained for a period of seven years, but in cases of bankruptcy the period is extended upto 10 years. This report can be obtained every 12 months from any national consumer report committee. For this a request is to be processed, providing personal information, like your name , addresses former and current, contact numbers, drivers license details, a copy of paid bills, and bank statements. As a rule credit bureaus do not share any information, so an individual is advised to maintain a copy of each.
All said and done the ultimate discretion lies with the moneylender whether or not he lends you money. All that we can do is try to clear all our debts in time and maintain a clear and flawless track record.