What is Your Credit Report Made Of?

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We often hear that a person’s credit report is very important because lenders, employers and even landowners check this document to measure one’s credibility and financial capability. But what really is inside your credit report? Do you really understand how it works? Let’s take a closer look on what your credit report is made of:

Inside Your Credit Report

Credit reporting agencies collect information from your creditors, debt collection agencies or from the court and compile all these information in one report. Everything listed here are considered to be accurate unless the owner of the credit report files a dispute about certain details in his report. However, if the information is correct –whether positive or derogatory - it will stay on your credit report for up to seven years.

Information that is contained in a credit report include a person’s full name, Social Security Number, date of birth, past and present home addresses, phone numbers, Driver’s license number, employment history and other personal details. If you do find any error, you must notify the credit reporting bureaus immediately and request that these details be corrected.

Liens, wages, foreclosures, bankruptcies and other public records are included in a credit report. It also contains a comprehensive summary of a person’s accounts from all his creditors or lenders regardless of what type of debt it is. It presents charges, penalties, date of payments, amount of debt, credit limit and everything that has to do with a person’s credit.

Credit Report and Inquiries

Each time a creditor or a company makes an inquiry about your report is also included. This is why consumers are warned against submitting too many applications from various lenders and banks all at the same time. Too many inquiries in your credit report can damage your score especially if you have been rejected by a lender.

However, personal inquiries are not regarded as negative and will not affect your credit score. In fact, it is recommended to inquire about your personal credit report at least twice a year so that you can be updated with the status of your credit history and score.

The three major credit bureaus are Experian, Equifax and TransUnion. Each of these agency works independently in reporting a person’s credit history. Thus, if you have any dispute about your credit report, see to it that you advise all three of these credit bureaus so that corrections can be made in your report accordingly.

The Fair Credit Reporting Act protects all consumers from fraud and ID theft by ordering all credit bureaus to do the necessary corrections immediately if a person claims a dispute in his credit report.

If you own a business, you can also apply for a separate credit history for your company from two major business credit trackers in the US- Dun and Bradstreet and Experian. The credit score for a business account is known as Paydex and this is the one used by lenders and financial providers in approving business loans.