3 Credit Reporting Agencies

There are many private credit bureaus which state they would offer credit reports. But beware. They could be scams. In the US there are only 3 credit bureaus which offer credit reports. These give a fair idea to the creditors whether they are taking the right decision while lending the money to the individuals.

What are credit reports and how does the credit score affect a person:

All the 3 credit bureaus Experion, Transunion and Equifax are actually helping the stakeholders i.e. the creditors in this case earn their bread and butter. These bureaus provide the credit report and also counsel you on what modifications you need to make. They also keep you posted 2 times a year on the status of your history and also caution you when you are about to exhaust your limit.

Your credit score which reflects on the credit report plays a very important role in your standard of living. One must understand that the reports generated by these credit bureaus may not tally with each other in all respects. The approach adopted by these credit bureaus may be similar in fashion. One would notice that the report generated by these 3 credit bureaus would more or less imply the same thing. A credit report includes the name of the borrower, his address and the name and address of his employee, place of work etc.

Information or data related to his past credit – whether he or she has any past pending loans or mortgages to be cleared – credit balance at the banks etc.

Pattern of payments – it gives an idea of your past payment pattern. How regular or irregular one has been with respect to settlement of monthly bills, loans etc.

Legal records – whether there are any cases of litigation or legal case proceedings in the court of law against you.

Your personal statements – It is mandatory for an individual that he provides a statement containing all the personal information.

Most information contained in the credit report should have error free information. One should ensure that you give attention to details in the credit report. Credit bureaus have good contacts with creditors and financiers. Since they are in the industry since a long time, it enables the credit bureaus to generate error free and accurate reports. Each credit bureau would have its set pattern relating to the past history of an individual’s credit pattern. Each credit bureau would generate reports based on the credit score of the individual.

Credit bureaus main source of income is the technology of credit scoring. The credit bureaus generate credit reports based on the individual’s credit score which enables the creditors to decide whether it is worth giving credit to an individual or whether the individual is credit worthy.

Calculation of credit scores: Credit bureaus use the FICO score to arrive at the credit score of an individual. Most of the creditors work in close association with credit bureaus to arrive at a decision. In case you are moving to a new residence and you need an electric connection, the electric company would first get in touch with the credit bureau to find out your creditworthiness.

Cell phones: While purchasing a cell phone also, the cell phone company would first confirm with the credit bureau regarding one’s creditworthiness.

Accessibility: Every individual has free accessibility to credit reports. Individuals can contact the credit bureaus and get their free credit report annually. You need to pay a fee to the credit bureau for getting your credit score.

It is also important that one checks the credit report for any errors or ambiguity. One needs to also ensure that the credit report is up-to-date, accurate and clean before applying for a loan.

Car Repossesion and Credit Report

Your credit score is affected if you are a victim of car repossession. Now let us see how this operates. Assuming you are no longer able to make your EMI payments, it would automatically reflect in your credit report. You would have already crossed the 30-60 days due date. Realization would have set in only after 2 or 3 months. Now, what do your do. It is definitely not good if the repossession occurs.

Say for example X Company wants to repossess your vehicle and your outstanding amount of loan is about 9000 dollars. Once the company is in possession of your car, they have every right to dispose off your vehicle. Suppose they dispose off your vehicle for about 5000 $, they would still want you to settle the outstanding amount. You would still have to pay the outstanding amount even though you do not own the vehicle. Your credit report would reflect the repossession item. It would be denoted by I-9, which indicates that you have yet to settle the installment amount.

If the company feels it is not able to get the money back from you, then would write off this as a loss or bad debts.

Now what happens when you intend applying for a loan from another company. They would want to check your credit report, and if they notice the repossession clause, it would affect your creditworthiness. You can be rest assured that they would not want to have any dealings with you. This entry would remain in your file for the next 7 years, making it absolutely difficult for you to get any future loans and credits.

Your credit score automatically drops down and you are not in a position to get any credit from any company. Despite your best efforts to settle the balance loan amount, the entry still lingers in your credit file for the next seven years. There are possibilities that you could still talk to your creditors that you have paid off the outstanding amounts. Ensure that you communicate with your creditors in writing. Also ensure that your creditor also pens down the agreement so that there are no errors or any communication problem. Hence one is advised that one maintains all communication in written form.

If your credit report goes for a toss, then it is extremely difficult to rectify it. This does not imply that you have permanently spoilt your credit report; it implies that it would take time to rectify the damage caused. One needs to ensure that one pays off all the pending loan amounts due and start afresh, applying for a loan. There are methods and means where you have to pay the creditor about 500$. This is just like a deposit, in case you are unable to make the payments. The creditor is assured that he has not lost his money. The payment due would be deducted from this deposit amount.

A bad credit score could also be a hurdle in getting a good job. You would also have to exorbitant rates of premium on your car and vehicle insurance.

Credit Report and Bankruptcy

How to avoid bankruptcy with credit report

The trend nowadays is that one gets everything on credit. Banks also help the individuals to purchase goods and services on credit. We only have to pay through our credit card. Plastic money has become quite popular nowadays. Even though Banks offer credit, there is a limit on the credit limit. One has to ensure that he or she pays the minimum payment due before the stipulated period. One is advised to request the Bank to send one’s monthly credit card statement so as to enable you to have a correct position of your credit score.

This would give you a fair idea of your financial standing. Your credit score decides your eligibility for a credit finance loan from a Bank or a financial institution.

Even if you have a sanction for a loan, be it your home or car of any capital good item, then your credit score should be sound.

One needs to have a sound knowledge and awareness about one’s credit scores so that one is saved from the awkwardness and humiliation of getting rejected by a Bank or a financier. In case you do not have a reasonably good credit score, your application would get rejected outright.

This credit score is the deciding factor for most of the banks and financiers. This would decide your repute i.e. whether you would be able to discharge your minimum loan amount. Banks and financiers first ensure whether the person to whom they are lending the money is a genuine one or whether they would have to chase you for the minimum amount.

Banks and financial institutions carry out their share of groundwork checks to ensure that they have made the right decision by lending you the money. They also conduct background checks about your monetary situation before even considering you request for a loan.

A credit score rating of about 700 to 800 points is considered a reasonably fair one and something like 650 is an average one. Anything lesser than 650 is not a good credit score. You can be rest assured that with a credit score of 650, your application would stand rejected for any loan, credit card or sanction for a loan. It is mandatory that one checks for correctness and accuracy in one’s credit score. In case there is an error which needs to be rectified, please resolve it immediately before approaching the bank or your financier for a loan; since if your credit score reflects a not so good score, your application would get rejected for no fault of yours.

Internet offers the facility of getting you your correct and accurate credit score. There are various sites which cater to the above. Free copies available on the net would not reflect the accurate facts. Hence, one is advised that one shells out some money for getting an accurate and error free report about one’s credit score. This report ensures correctness with minimal ambiguity. This would also equip you with extra confidence in approaching your banker and there are sure chances of your success. With a brilliant credit score, you could buy the goods of your choice, with the loan given by your banker or your financier.

How To Fix Errors on Your Credit Report

Your credit report is an important data point that you need to watch out for. You need to pull out this report on a regular basis to check if everything is okay and whether your rating is as per your understanding and expectation. Not doing so can cost you a lot in terms of cost as well as credibility. Having prior information on your credit rating equips you to face your lenders with more confidence and not get jolted by negative surprises.

You could question the need to check this report, but many have realized the virtue of doing so. These reports are scanned and looked at by three main agencies and they have to look at lot of data leading to much pressure. There is the possibility that some errors could creep in due to data entry mistakes. Other possibilities are identity theft or erroneous reporting from the lending bodies.

As with anything, to correct something, you need to get access to it to look at what needs correction. You can do this by getting in touch with the agencies or pulling these reports from the internet. The next step is to study it and if you do find mistakes, take necessary steps to make corrections. The process may be taxing in terms of the effort and time taken, but is worth taking. Failure to fix a report which has errors could cost you a lot when you go to seek a loan. You could be charged a much higher rate of interest, since the report could have a negative rating.
You can fix these errors by yourself or approach somebody to do it for you.

Irrespective of the methodology, the process takes time and you need to be on top to check whether the needful has been done. Credit reports can be got for free once a year but it is better to check at least once a quarter for the status, even if it means paying some money to get it done.
If you are seeking a good deal in loans or credit card terms, make sure you have the latest and correct credit rating report. If not, you could end up paying a lot more unnecessarily and this can also impact your credibility negatively for the future. The onus and responsibility is on you for your report and you cannot put the blame on either the overseeing agencies or your prospective lender for a credit report showing errors.