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  Category: Articles » Finance » Credit » Article
 

The Secret Of Credit Reports




By John Simpson

Creditors, bill collectors and bankers have one thing in
common: they know about your credit history and have access
to your credit report. For anyone who has ever wanted to
buy a car or a house, your credit score impacts whether you
will be approved for a loan and at what interest rate
you'll be offered.

A credit report exists so that financial institutions can
rank your' trustworthiness' to pay back the loan. In a
world of billions, it becomes impossible to just take
someone's 'word' for it. Instead, companies such as
Equifax, Trans Union and Experian receive merchant
information detailing your activity.

A standard credit report contains a list of every form of
credit line you could have opened, including in some areas
your utility bills. They list the name of the institution,
the full amount borrowed, the payment, how often the
payment is due, if payment is up to date and an arbitrary
score assigned by that system as far as number of months
paid and on time. Then using a formula, the credit agency
tabulates all of these numbers and rates you with a final
score.

When any company or individual requests a copy of your
credit report, they are required to obtain your consent.
However, agencies polling to offer you a credit card can
also create a 'hit' on your credit report. Every single
time your report is accessed by anyone for any reason, it
adds an information line to your report.

Because you may receive a line of credit and it can take up
to 90 days or more before it actually appears on the credit
report, the number of hits to your report is also factored
into your score.

So, imagine if you were offered 10 pre-approved credit
cards via the mail, each one of those companies likely
created a 'hit' on your credit report. If you shred them
and toss them into the trash, it can take four to six weeks
for those hits to no longer affect your score. While their
effect is minimal, figure how many free offers for credit
you get every week. It really begins to add up.

In the end, a credit score vouches for your reliability in
paying your debts. It means that you are a good 'risk' and
the company is less likely to lose money on you. With the
list of those asking for your credit score growing, credit
checks are becoming a regular function in opening a bank
account, renting an apartment and applying for a job. Some
employers require a good credit score as well as a good
work history on your resume to hire you into their
companies.

No matter the reasoning, sound or otherwise, behind asking
for your permission to pull a credit report, it is an
invasion of privacy and it calls into question even the
most honest and reliable individuals. Clerical, human and
computer errors can all cause inaccuracies. All it takes is
one misreport by a company to create backlash in your
credit scores. Combine human error with robbery (such as
identity theft) the matter becomes especially serious.

You can repair the damage to your credit report through
prevention, contact and persistence. Always pay your bills
on time, report any issues with payment immediately to the
company and avoid your bills being sent to a collection
agency.

Contacting a credit agency to report an error on your
report can take 14 to 21 days to be straightened out. By
law, if you dispute a line on your credit report, they are
required to contact the reporting company. If the company
does not respond within a certain time frame, the error
must be removed.

But errors cost time and money. Some agencies do not react
quickly, despite the law, and it can take frequent contacts
to repair inaccuracies. Some credit agencies are becoming
more and more Internet savvy and this allows the end user
to contact them via a website or email rather than posting
a ground letter.
===========================================================
Find out how to repair your credit. Discover why a good
credit report is vital to your financial future, and how to
make it the best Click
http://www.credit-repair-101.com/repair-credit-score.html


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About the Author
John Simpson works in software development. A few years
ago, he got in trouble with credit card debts. Now he's
written a series of articles explaining how he recovered,
and repaired his credit.

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