As soon as you get a social security number someone is keeping a file on you and everything you do with your money. All the details stored comprise your credit report and are maintained by credit reporting agencies. One of the biggest agencies in the US is Trans Union.
Every time you apply for credit, the potential lender will look at the information held by companies such as Trans Union. Increasingly more companies such as utilities, landlords, insurance providers and even hospitals are relying on both the information stored and being able to add information to your file. Considering how wide spread the usage of credit reporting agencies is it is important to understand what makes up your credit report, what is contained in your file and what to do if there is an error.
There are 4 parts to the credit related section of your credit file. These sections are identification, credit history, public records and report requests. The identification section contains basic details like your name, date of birth, past and current addresses, social security number and the address of your employer.
The next section, your credit history, is very important and is also the most likely section to find errors in. On average 1 out of 4 credit reports contain errors that could mean you have to pay a higher interest rate then you really should. The credit history section contains all the details from the last seven years of your bill payments, the amounts owed, if you have credit established and what type of accounts you have had.
A creditor wants to see stability in the history section and a variety of types of credit. Your creditor may be willing to over look small problems. For example a bill that was 30 days late 3 years ago is less important than a bill that recently went to collections. The combination of all this information determines what your credit score will be.
The public records section of your credit report is something that you may not be able to influence and can very greatly affect your credit score. Normally things such as bankruptcies, tax liens and court judgments for any reason are listed here. Any information here, regardless of if it has been cleared up, will greatly impact you. If you have an entry in this section be very proactive about ensuring that it is removed promptly and that it doesn’t happen again.
The last section is the inquiries section. This section contains the details of all the companies who have requested your credit report and when. There are three types of inquiries, business, promotional and account management. Business inquiries are the only official type of credit check and let everyone know who has checking their credit when and sometimes why.
The promotional section details what companies have used your information for advertising. For example, in order to determine who should be pre-qualified for a credit card, a credit card company may contact a credit reporting agency and request a mail list of everyone who makes more than $30,000, has been employed for more than 3 years and owns a new car. The company does not see your credit report and their name is listed in the promotional section.
The account management section is basically what it sounds like. Those companies that you have authorized to access your credit file will review your credit and update their notes on your file from time to time.
As you undoubtedly know, your credit score is a vital part of you. Hopefully you now also know how simple it can be to understand your credit score and what information it comprises. Make a point of contacting Trans Union and requesting a copy of your file to ensure it is accurate and to put you on the same playing field as your creditors when negotiating your loans.