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Personal Credit Report
 Jun 08, 2004

Your personal credit report is the main source determining your eligibility for a loan. In this article we will explain how a credit report is compiled and who has access to your credit report. This information can help you manage your personal credit report.

Your credit report is probably the most important personal finance document out there. This is because your credit report is, quite literally, a history of all your financial dealings. It contains vast amounts of information detailed information that many people use to determine how they will deal with you. Indeed, there is nothing in your personal financial life that is more important than having a favorable credit report.

How is a credit report compiled?

It is important to understand how your credit report is compiled (and it is a compilation). Basically, there are three major credit bureaus. All of them put together a report that includes basic identifying information about you, as well as your payment history and the types of loans that you have. So, in reality, you actually have three credit reports, one each from Experian, Equifax and TransUnion.

Here is the process that is followed in compiling your credit report:

  1. You apply for credit and open an account.
  2. The company that offers you the credit reports the account information to one or more credit bureaus. This information can include the account balance, the credit limit and other details.
  3. Every month, the company reports again, offering current balance information, and whether you made your payment on time.

If you are delinquent for a long time on your rent or utility payments, those companies can report you to the credit bureau as well. Additionally, your employer may report details of your employment. If there are judgments against you, liens or bankruptcies, these, too, are reported to the major credit bureaus.

You should note that discrepancies between the credit bureaus can arise. This is because some companies only report to one of the bureaus. So all of the information you have on one report may not appear on the other. However, the credit bureaus often compare notes, so even if there is a lag of 60 to 90 days, often the information finally appears on all credit reports.

Who looks at your credit report?

There are a number of people who have an interest in your credit report. In fact, these days it is best to assume that just about everyone is going to want a peek at your credit report. Here are some of the people and the reasons the give that want to look at your credit report:

  • Creditors and lenders. This group is obvious. Before extending you credit, or offering you a loan, lenders and creditors want to make sure that you have a good financial reputation. They will look at your credit report to decide whether you are likely to pay them back, and make a decision based on whether you have met your past obligations.
  • Landlords. Many landlords are concerned about people who might take off without paying for a couple of months rent. They are also concerned about whether they will have to fight with you for each month's rent. As a result, some landlords will turn away those with bad credit, or require them to pay a higher security deposit.
  • Insurance companies. More and more, insurance companies are considering those with responsible financial practices (as demonstrated by their credit) to be responsible in other areas. Some will use your credit to determine your premium rate.
  • Utilities. In many cases, especially for Internet and TV service providers, your credit will be checked before you are offered services. This is to ensure that you are not a problem when the monthly bill comes. Cell phone providers are also concerned about your credit report.
  • Potential employers. Many employers are starting to worry about bribery and embezzlement. They consider someone with poor credit a security threat. This means that a potential employer may want to see your credit report before offering you a job.
  • Marketers. Loan offers, credit card offers and sales offers are often targeted to those with good credit. Some marketers will pay for access to your credit report in order to offer you deals related to financial services.

It is important to realize that for some such as your landlord, utility provider or potential employer you have to grant permission for them to look at your credit report. This is because only those who have a real need to see it for financial reasons have the right to look at your report without your permission.

Check your credit report often, since it will give you an idea of who has been looking at it, as well as give you a chance to catch errors. With so much information, it is no surprise that sometimes a mistake is made. You need to fix these as soon as possible in order to ensure that you maintain a good credit report.

Related Article: Credit Rating Score >>

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