Credit Report Definition

What Is a Credit Report ?

A credit rating composition is a detailed breakdown of an individual ‘s credit history prepared by a credit agency. Credit chest of drawers collect fiscal information about individuals and create credit reports based on that information, and lenders use the reports along with early details to determine loanword applicants ‘ creditworthiness .

In the United States, there are three major credit reporting chest of drawers : Equifax, Experian, and TransUnion. Each of these reporting companies collects information about consumers ‘ personal fiscal details and their bill-paying habits to create a unique credit report card ; although most of the information is similar, there are much little differences between the three reports.  

Key Takeaways

  • A credit report is a detailed summary of an individual’s credit history, prepared by a credit bureau.
  • Reports include personal information, details on lines of credit, public records such as bankruptcies, and a list of entities that have asked to see the consumer’s credit report.
  • The three major credit bureaus—Equifax, Experian, and TransUnion—are each required to provide consumers with one free report each year. 

Understanding Credit Reports

credit reports include personal information such as the individual ‘s current and previous addresses, Social Security numbers, and use history. These reports besides include a credit history drumhead such as the number and type of bank or credit batting order accounts that are past due or in good digest, and detail account information related to high balances, credit limits, and the date accounts were opened.

Advisor Insight

Derek Notman, CFP®, ChFC, CLU
Intrepid Wealth Partners LLC, Madison, Wis .
Make sure to review your credit composition before you need it. A node of mine was applying for a home mortgage, and when the bank pulled their recognition report, there was over $ 20,000 of credit tease debt on the report, but the node didn ’ thyroxine have any recognition cards .
What had happened was that the customer had the same name as their founder, so when the credit reputation was run, it pulled their right information, but besides by chance pulled their father ’ second credit card proportion .
Make surely to check for errors before you think you will need to apply for credit sol you can have them fixed if there are any. not doing this could delay your recognition decision, cause your lender to think twice about lending you credit, and ultimately delay a time-sensitive leverage. recognition reports besides list citation inquiries and details of accounts turned over to credit agencies such as information about liens and engage garnishments. Generally, accredit reports retain negative information for seven years, while bankruptcy filings typically stay on citation reports for about 10 years.

Each of the three major credit reporting agency in the United States—Equifax, Experian, and TransUnion—provides exchangeable readings on consumers ‘ fiscal details, but there are much little differences.

How Credit Reports work

credit reports typically divide data into four sections.

First section

The top of the report card contains personal information about the consumer, and in many cases, this section may include variations of the consumer ‘s name or Social Security act, merely because the information was reported incorrectly by a lender or other entity.

second section

The moment section comprises the bulk of most reports and includes detail information on lines of credit, besides called trade lines .

third gear part

The third base section includes public records such as bankruptcies, judgments, and tax liens.

Fourth section

The bottomland of the report lists all of the entities that have recently asked to see the individual ‘s credit composition because of an event such as applying for a personal loanword .

If an individual submits an lotion for credit, an indemnity policy or rental property, creditors, insurers, landlords, and choice others are legally allowed to access his credit report. Employers may besides request a copy of an individual ‘s recognition report equally long as the person agrees and grants license in writing. These entities typically must pay the credit chest of drawers for the report, which is how credit chest of drawers earn money .

special Considerations

The Fair Credit Reporting Act requires each of the three accredit reporting chest of drawers to supply consumers with a release credit reputation once per year. Federal police besides entitles consumers to receive free recognition reports if any company has taken adverse action against them. This includes denial of credit, insurance, or employment adenine well as reports from collection agencies or judgments. however, consumers must request the report within 60 days from the date the adverse action occurred.

In accession, consumers who are on wellbeing, people who are unemployed and design to look for a job within 60 days, and victims of identity larceny are besides entitled to a free credit report card from each of the report agencies.

For consumers looking for ways to repair their credit, there are companies who can negotiate with your creditors and intercede with the credit agencies on your behalf. There are both reputable companies and scammers in the industry, so it ‘s important to research firms based on their repute and good stand to be certain you ‘re hiring one of the best credit repair companies available .

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