Credit and Credit Reports
Your credit influences your ability to get a loan, and it will impact the terms and interest rate, too. A good credit history increases the confidence of lenders and creditors when they loan money to you. When they see that you have paid back your loan when and how you agreed, lenders are more likely to extend credit again. If you don’t have good credit, it may be difficult to get a mortgage. That is why it is important to understand what affects your credit, know exactly what your credit report says, and monitor it regularly.
Your credit report begins the first time you apply for credit. From that point on, each time you apply for a credit card or loan, information is added to it. Credit-related transactions appear on your credit report, including your current debts, paid debts, and payment histories. Equifax, Experian, and TransUnion. These companies sell your credit report to banks and other creditors so they can review your past credit history. It is not uncommon for the credit reports from each company to be slightly different. Therefore, it is important that you pull a credit report from all three companies when monitoring your credit.
Your credit report includes:-
A list of debts and a history of how you've paid them.
This can include credit cards, car loans, and student loans. -
Any bills referred to a collection agency.
This can include phone and medical bills. -
Public record information.
This can include tax liens and bankruptcies. -
Inquiries made about your creditworthiness.
An inquiry is made when you apply for credit. Your credit report can also show if you were given credit based on the inquiry.
Adverse or derogatory credit information in your credit report will remain on your credit report for up to seven years. Public records, depending on the type, will remain on your credit report anywhere from seven to 10 years. Your credit report is continuously updated, which is why you should always know what it says.
Additionally, regular monitoring of your credit can help you spot and put a stop to identity theft early before your credit is seriously harmed.
Resources
Understanding the difference between your credit history, credit report, and credit score:
- Credit History: A record of credit use comprised of a list of individual consumer debts and a record of whether or not these debts were paid on time or "as agreed." Credit institutions have created a detailed document of your credit history called a credit report.
- Credit Report: A document used by the credit industry to examine your use of credit. It provides information on money that you've borrowed from credit institutions and your payment history.
- Credit Score: A computer-generated number that summarizes your credit profile and predicts the likelihood that you'll repay future debts.