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Credit report basics

By James Mercer

Why should you want to check your credit report rating? How do I get ahold of my credit report? What is shown in your credit report? Now I will take a look at all of this. I encourage everyone to get their hands on their credit report to make sure that it is accurate. In this day and age, your future could be riding on it.

Well...to know the credit worthiness of an individual, lenders often rely on a the credit report. A credit report is a rating made by an authorized credit agency that signifies a person's credit history. A credit report must be checked regularly in order for the individual and his lenders to know his credit rating. It's an important part of the mortgage process, whether it's a personal loan, business loan, refinance or debt consolidation. Anytime you go to a financial institution to get a loan your credit rating will be checked.

Why do you need to check it?
Many things can happen that can effect your credit rating that is incorrect. For example:
1. Utility companies may have reported you as paying late when you didn't. This is something that should be cleared up. It will improve your credit rating. This same kind of thing can happen with anyone that you pay money to on 'credit'. Humans make errors and these errors could be effecting your credit rating.

2. You could have become the victim of identity theft. Right now identity theft is growing rapidly and the bigger the internet gets the easier it gets for someone to steal your identity. If someone steals your identity they can open new accounts in your name, switch card statements and other things that can ruin your credit rating. The credit report will show this.

3. If you have a familiar name, eg John Smith, you could be the victim of mistaken identity. Someone else may have your same name and age. Their credit history may very well be effecting your credit history. Humans do error. If a data processor enters the credit information on the wrong person than you could be shown as having a bad loan in your name. In reality it is a bad loan that someone with your same name hasn't been paying..

4. Seeing what your credit report shows can help boost your confidence. Knowledge is always the key to leverage. With the knowledge of what your credit report says will help you know whether or not you are worthy of the credit you are trying to obtain.

Where to get your credit report
There are three source where you can obtain your credit report:
1. Equifax
2. Experian
3. Trans Union

Each one of these agencies uses their own methods of arriving at receiving credit data and calculating your credit score. Attention should be paid to each one of these companies, as you do not know which company a potential lender is using. If you have checked out two of the companies and company three has errors and the lender is using company three, it could cost you your chance of getting the loan or credit card.

A credit report score can go up to 900, and an increase of 50 points is big. It could enable borrowers to get loans that had previously been denied, and/or getting those loans at much better interest rates. Do you realize a 1% drop in the interest rate can make a big difference in how much you end up paying on a loan. For instance, a $150,000 house may see the monthly payment drop by over $100. This could save the borrower over $35,000 over the life of a 30 year loan.

Looking at the report
Information included on the credit report:
1. Personal information.
A. Name
B. Current and recent addresses
C. Social Security Number
D. Date of birth
E. Current and previous employers

2. Credit history
Most of your credit report contains the details about credit accounts that were/are opened in you name or list you as an authorized user(such as a spouse's credit card).

The details supplied include:
A. Date the account was opened
B. The credit limit or amount of the loan
C. Payment terms
D. Current balance
E. History, this shows if you have been paying on time or not

Closed or inactive accounts, depending on the manner in which they were paid, stay on your report for up to 11 years from the date of their last activity.

3. Inquiries.
Credit reporting agencies record an inquiry anytime your credit report is shown to another party. Included in list are:
A. Lenders
B. Service providers
C. Landlords
D. Insurers

Inquiries remain on your credit report for up to two years.

4. Public records
Matters of public record obtained from government sources such as courts of law including:
A. Liens
B. Bankruptcies
C. Overdue child support

Most public record information will remain on your credit report for 7 years. Tax liens can remain on your report for up to 15 years, and bankruptcies for up to 10 years.

Things not included on your credit rerort
1. Checking or savings accounts
2. Bankruptcies that are more than 10 years old
3. Charged-off or debts placed for collection that are more than seven years old
4. Gender
5. Ethnicity
6. Religion
7. Political affiliation
8. Medical history
9. Criminal records
10. Your credit score

Your credit score is generated by information on your credit report, but is not part of the report itself.

Who Can Look at Your Credit Report?
Anyone with what is considered a permissible purpose can take a look at your report. These include:
1. Potential lenders
2. Landlords
3. Insurance companies
4. Employers and potential employers (usually only with your written consent)
5. Companies you allow to monitor your account for signs of identity theft
6. Some groups considering your application for a government license or benefit
7. A state or local child support enforcement agency
8. Any government agency (although they may be allowed to view only certain portions)
9. Someone who uses your credit report to provide a product or service you have requested
10. Someone that has your written authorization to obtain your credit report

Go out and get your hands on your report and look through it and make sure everything is correct...Because Money Matters

About the author:
James Mercer posts articles of interest to those wanting to learn more about the financial world the runs their life Monday-Friday at www.becausemoneymatters.blogspot.com

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