Archive for March, 2011
A credit bureau tacks and keeps a record of credit history and other financial information of an individual and determines the credit rating of an individual. Such credit ratings are useful to the lenders while lending their money to an individual. The lenders check the ratings and determine the risk in granting the loan. The higher the credit rating, the lower the risk and vice- versa. In addition, a low credit rating results in a higher rate of interest on a loan.
In the world of credit ratings, three credit bureaus are famous, namely Equifax, Experian and Trans union. These three credit bureaus maintain data regarding the credit rating of an individual and constantly share information with each other. Whenever an individual applies for a loan, the lender checks the credit report and score provided by these three credit bureaus. A credit bureau tracks an individual with the help of a social security number.
The three credit bureaus constantly update information provided by the creditors. Such information includes particulars about the date on which the account was opened, the credit limit sanctioned, the current outstanding balance and any default in the repayment of the loan. In addition to this, if the individual has closed the account after paying off all the dues, the report will show the details for a period of seven to eleven years.
The three credit bureaus also reply to any query made into a person’s credit history. The report contains the particulars of a person making the enquiry and the particulars of the query. However, the higher number of hard credit queries negatively affects the credit rating of an individual.
The reports prepared by these credit bureaus are considered as public documents and helps the lenders a great deal in determining the reliability of an individual. For instance, creditors will be hesitant in granting a loan to a person who has been declared bankrupt in the past as compared to a person with a clean credit report.
People have different views regarding the credit bureaus. While those with a poor credit rating consider it to be hurtful, those with a good credit record greatly benefit from it. The credit rating agency grants an opportunity of being heard to an individual before adding a potentially negative item to their credit report. Moreover, in some states the credit bureaus are required to give a copy of the annual credit report to an individual, which in turn allows individuals to keep his or her credit record under check.
In the United States of America, the credit worthiness of a person is represented in terms of credit score. Lenders and banks use this score in order to evaluate the risk posed in lending a sum of money to an individual. The credit sore and the credit history of an individual is reflected in the credit report of an individual. Such credit reports are prepared by various credit rating agencies. As per the F.A.C.T act (Fair and accurate transactions act), every legal resident of the United States is entitled to a free annual credit report from each credit rating agency.
The free annual credit report is not sent robotically to a customer. If required, a customer can request a free annual credit report through one of the following three ways
- Consumers can access their credit report online for free on AnnualCreditReport.com , which is the only online authorised source.
- They can also call (877) 322-8228
- Or, they can also fill the form on the back of the annual credit report brochure available from the federal trade commission and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281
The free annual credit report does not contain the credit rating of an individual. It contains the summary of your payment history along with balances and behaviour of each account.
Usually there are three kinds of credit reports, namely
- The free annual credit report – the annual credit report is prepared by the three credit rating agency in the United States i.e. Experian, Transunion and Exuifax which contains information regarding a consumer’s credit history.
- Business credit report- The business credit report is also prepared by the three credit rating agencies and it contains particulars about the credit history of a business house. Business organisations are also entitled to a free annual credit report
- The consumer Credit report- It is a report prepared by the United Stated credit reporting agencies containing information about the credit history of a customer. However unlike the annual credit report the consumer credit report is not available for free.
Many times there are incorrect information displayed in your credit report due to clerical error at the time of entering of data and hence it is vital to read your free annual credit report. According to a recent survey conducted on the level of errors in the credit report, one out of every four reports contains serious errors on the part of the employees of the three credit rating agencies.