Credit report

The Credit Report: What exactly is it and How Can I get One? GAD Capital explains in details

A credit report summarizes a person’s credit profile that contains information on open and canceled accounts and payment and balance histories. Soft and hard credit inquiries, public records, and collections are all included in the reports. The three largest bureaus—Experian, TransUnion, and Equifax—publish official credit reports that lenders and other financial organizations use to assess the eligibility of loan applicants.

We’ll show you what to expect when examining your credit report and how it can affect your credit score to help you make the most of it.

What Can a Credit Report Tell You?

Credit reports vary in substance and presentation depending on the credit bureau, but they commonly include the below.

Information about yourself

A credit report’s first part contains vital personal details such as your current address, full name, and employment history. Make sure the below details are correct and up to date when examining this section of your report:

  • Any names linked to your credit. A list of names linked with the consumer’s credit file is one of the first components of a credit report. This usually includes the consumer’s complete name, previous surnames, and any variations, such as full names with or without a middle name or initial.
  • Your credit’s associated addresses Similarly, each credit report contains a list of addresses, including the consumer’s current address and any ones provided when applying for or opening new accounts.
  • The past employers you have worked with. This section of the report includes a list of the consumer’s current and previous employers and their locations, hiring dates, and other pertinent information. Co-applicants or spouses. The consumer’s spouse and any joint credit applications are listed on the credit report.

Accounts with Credit

A list of consumers’ credit cards, real estate loans, and installment loan accounts is the most important element of a credit report. Each account is listed with the necessary information: 

  • Basic account information. A summary of each account is provided in this section. The account status column shows if the account is active or closed. This usually includes the credit limit, the greatest balance, and the debt-to-credit ratio.
  • History of payments and balances. This part contains specific payment information, such as an account’s complete payment history. Each payment record shows if the payment was late or whether the account was sent to collections.
  • Relevant Remarks. Additional comments may appear on some credit reports, including Experian’s. Closed accounts, for example, have a note that says “Account closed at consumer’s request.”

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Inquiries

Any hard and soft queries into the consumer’s credit are likewise listed on every credit report. Hard inquiries stay on credit reports for two years and usually have a one-year influence on the borrower’s credit score; soft inquiries stay on for two years but have no effect on credit scores.

Credit reports show who made the inquiry and when it was made when looking at hard credit inquiries. Reports also include the mailing address of the inquiring company as well as information regarding the inquiry’s aim, such as real estate. In many situations, this area will indicate “Unspecified,” so if an entry appears to be questionable, investigate a little deeper. 

Soft credit inquiries don’t affect credit scores. Therefore, these entries usually don’t specify when they’ll be removed from the report. On the other hand, reports continue to show who requested the inquiry, the relevant mailing address, and all request dates.

Records available to the public

Any information connected to legal concerns such as bankruptcies, tax liens, and monetary judgments against the consumer is listed in the public records part of a credit report. This data comes from the courts and other government bodies.

If you have previously filed for bankruptcy, the report will reflect its status, and depending on the form of bankruptcy, the problem will be on your report for seven to ten years. Alternatively, if there are no relevant items, this section may be left blank.

Items for the Collection

Finally, delinquent accounts forwarded to a collection agency are summarized in a distinct area of a consumer’s credit report. Collections can negatively influence credit scores and can stay on credit reports for up to seven years after the account becomes past due.

How can I check my credit report?

Each year, consumers are usually entitled to one free credit report from each major credit bureau. You can purchase individual or group reports from Equifax, Experian, and TransUnion. However, the three bureaus are issuing free weekly credit reports until April 20, 2022, in the wake of the Covid-19 pandemic.

You can get your free credit report in one of three ways:

  • Go to AnnualCreditReport.com for more information. Choose whether you want a single credit report or reports from all three main credit agencies by going to the website. Following your report selection, the bureau will ask you to answer questions to authenticate your identity.
  • Call 1-877-322-8228 for further information. To obtain your credit report over the phone, dial the number and follow the prompts to complete the verification procedure. Within 15 days, you will receive a copy of your credit report in the mail.
  • Fill out the Request for an Annual Credit Report form. Fill out the Annual Credit Report Request Form, place it in a #10 envelope, and submit it to the Annual Credit Report Request Service with enough postage.

What Should I look for in a credit report?

Keeping track of your credit profile and protecting your identity by reviewing your credit report is sensible. If you wish to increase your credit score, credit reports can also provide a wealth of information. When checking your credit report, keep the following in mind:

  • Double-check that your personal data is correct.
  • Check the status of each account to ensure it is consistent with your records 
  • Review all of the accounts to ensure you recognize them
  • Confirm that your closed accounts are included in the report and designated as closed by the consumer, where appropriate 
  • Ensure the accuracy of lawsuits, bankruptcies, tax liens, and other legal actions by calculating the credit usage ratio of each revolving credit account.
  • Review your records and contact your lender to analyze the disparity if you suspect any of the account information is incorrect. 
  • If you want to dispute an error on your credit report, you can usually do so on the credit bureau’s website, phone, or letter.

The Impact of Your Credit Report on Your Credit Scores

Except for your personal information, every aspect of your credit report has the potential to influence your credit score. However, some portions of your credit report have a greater impact than others due to how credit ratings are constructed. Here’s how the information in your credit report affects each component of your credit score:

Previous payment history

Payment history is the essential aspect of your credit profile, accounting for 35% of your FICO score computation. Examine your payment and balance history in the accounts area to assess this aspect of your credit score. If you find any errors, file a complaint with the bureau.

Accounts receivable. 

The total amounts owed, which account for 30percent of a consumer’s credit score, are the next most important factor to consider. The accounts section of a credit report displays each account’s current balance and the account’s maximum balance over the account’s lifetime.

Credit history length

The length of a borrower’s credit history is reflected in the accounts part of their credit report, contributing to the 15percent of a credit score computation.

New credit

Borrowers who open many credit accounts in a short period are considered riskier by lenders than those who do not. Your credit score partly depends on the accounts shown in your credit report and their opening dates.

A credit mix is essential. 

The types of accounts you have, such as retail accounts, finance business accounts, credit cards, installment loans, and mortgages, account for a component of your score. Your credit report’s list of accounts can give you a glimpse of your credit mix, allowing you to determine if a new one would benefit or hinder your profile.