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Credit Report

A Credit Report Provides Payment History Information

The main way that a lending company obtains information about your credit history is through one of the credit bureaus. There are three nationwide credit reporting agencies in the United States that handle this, and they are Equifax, Experian, or Trans Union. These agencies collect your financial information from anywhere that you have developed a payment history, and purchased over time, like credit card payments, automobile payments, etc. Your monthly payments are recorded, and for each account they record the payment cycle for that particular loan – such as revolving for credit cards -- and they list according to the date when they were opened. Any lending company or any other company that needs to know your credit history, such as car dealers, mortgage companies, insurance companies, etc. are able to get a copy of your credit report in order to determine your “risk” of repaying the loan. Your credit report is not available to the general public though.

In fact, just 2 years ago the FIC allowed one copy per year to go to any individual who wanted to see a copy. Otherwise, a copy will cost approximately $8.50 per copy, per bureau, as each bureau has completely separate records. Online you could find companies that will send all three for a certain amount. But it is important for you to see your credit report, and see how you stand. You choose!

A company such as VISA, that is authorized, will obtain a credit report, or your payment history, when you apply for their credit card. With that, VISA can then see your payment history with all of your other accounts and decide if you are a good risk for repayment. Or, what most companies do today is to get your credit score from the credit report and evaluate your financial responsibility that way. too. (More on credit scores in next article).

"Whether you're trying to establish credit for the first time or to re-establish credit after experiencing financial difficulties, a lender will be looking for assurance that you can pay back the money you borrow", says Consumer Credit Counseling Service.

You must be able to prove to the lender these four things:

Stability - You must prove that you can hold a steady job with a dependable income and that you have lived in the same place for a certain length of time.

Ability To Repay - You must be able to demonstrate that your income exceeds your expenses.

Assets - Lenders will look more favorably on your application for credit if you have assets such as a home, car or savings account that can serve as collateral.

Credit References - Lenders will look to see if you have credit references and a good credit standing! The credit report will be a written record of these things. If you have no credit –either good or bad – consider getting that department store card so that you can begin to show your responsibility. If you have no credit, you’ll need to get copies of other payment histories to show to possible lenders. Payments such as with your telephone company, long distance, cell phone, electricity, or records from your bank. You’ll need proof of these assets if you do not have anything on your credit report.

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