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Everything You Need to Know About Your Credit Report

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So you keep on hearing about credit report, but aren’t sure what is it exactly and why it is important. This can help you know its importance and what information it contains. 

How is Information Listed on Your Credit Report Obtained?

Credit report agencies or credit bureaus are the businesses responsible for maintaining your credit report. Whenever you perform any business transaction with a company, such as a bank, lender, or utility company, they will send your payment histories or credit status to those credit bureaus, who will then update the information filed on your credit report. Usually, your credit card payment details and loan accounts will be updated on your credit report every month. While you can’t expect those companies to automatically report to credit bureaus every month, they will most definitely inform the credit bureaus if you’ve missed several payments during the past few months.

What can You Find in Your Credit Report?

Each time you are trying to apply for new credit, the lender or creditor will first look into your credit report to determine what type of borrower you are likely to become based on your past performances. They will also check on your personal information. Your credit report will list your name, address, date of birth, employment status, and other basic information. If you’ve had previous name misspellings, address or employment changes as a result of reporting errors or identity theft, they will also be included in your credit report.

During these applications, these companies will check on your credit history, and will be listed as credit inquiries on your credit report.

Your credit report will also contain information regarding your loans. This will include original loan amounts, outstanding loan balances, the type of loan, and your payment history. Your credit report will also keep track of your credit card details, such as your balances, credit limits, type of account and status, and your payment histories as well.

Any negative item or public record will also be contained on your credit report, such as foreclosure, repossession, lawsuits, and bankruptcy, which can stay on your credit report for about seven to ten years.

Checking Your Credit Report is Vital

Many borrowers tend to forget that the first and most important step before applying for new credit is to check on their credit report. This is to check for errors that could result in a damaged credit score so you can dispute them at once. In addition, if you know what’s in your credit report before you head to the lending institution, you’ll determine if it’s a great enough time to negotiate for the best deal or to postpone your credit application for the time being. This can help you avoid unnecessary inquiries and denied applications that could hurt your score even further.

Even if you don’t have any plans of applying for credit or loan anytime soon, you should request for a copy of your credit report at least once a year. This allows you to check regularly whether the information stored is correct and also avoid identity theft.

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