If you’ve ever applied for credit, you should be familiar with credit checks. Every time you apply for a credit product, be it a credit card or car finance, the lender looks at and reviews your credit report. This report shows them your credit history, if you’ve been in debt and whether or not you’ve been paying your bills on time, among other information.
It is important to know what has gone into your report, how accurate it is and how it could affect future credit applications.
Unfortunately, it’s a sign of our modern times that so much in our world is determined by this report, from mobile phone contracts to mortgages.
What’s in your credit report?
A credit report’s contents detail how you pay your bills and repay loans, the amount of credit that you have available, your monthly debts and other information that can assist a possible lender in discerning whether you are a good or bad credit risk and. Therefore it is used to decide whether lenders should give you a credit card, loan or line of credit.
However, you should remember that the report does not state matter-of-factly whether you are a good or bad credit risk. Instead, it simply provides lenders with sufficient and relevant information to enable them to decide for themselves.
Furthermore, it is not entirely your own decision what goes into your credit report.
The information is originally obtained not from you, but from merchants, lenders, landlords and similar sources by credit bureaus, also commonly dubbed credit reporting agencies, who then sell your credit report to businesses from which you request a credit card, loan or other line of credit.
To be precise, the information in your credit report includes your personal identifying information. Your name, address and telephone number will all be included. This will also include previous addresses.
It usually helps your credit score not to have a history of moving around a lot. If you have no permanent residence, you will look like more of a risk than somebody who’s lived in the same house for years.
Your credit history will be there, too. This will include your bill-paying history with banks, retail stores and finance companies.
There will also be information from public records that might indicate your creditworthiness and report inquiries, including mention of all credit granters who have received a copy of your credit report. Dispute statements, including any statements that you have made disputing any of the report’s information will also be featured.
There is information that can sometimes pop up on your credit report, but is generally very rare. Information detailing bank account balances, race, religion, criminal records, income and driving records have a possibility of being on the report.
Health details don’t usually appear on most credit reports, although details of medical bills may appear as debts.
All of this information is assessed and formed into what’s called your “credit score”. This is a three-digit number that is calculated through using information in the credit report.
Most creditors will use this number, and perhaps other types of scores, to assist them in judging a person’s creditworthiness.
If you have a score of 850, you have a much better chance of obtaining credit than somebody with a score of less than 500.