Credit rating report
credit rating report is a document on the credit behavior of a person over past few years and is provided by specialized agencies called as credit rating agencies or credit bureaus. credit rating reports are very important because these determine the terms and conditions of credit facilities applied by a person. If credit rating report is not satisfactory, lender can also deny the credit facility applied. Apart from lenders, insurance companies, land lords etc also make use of credit rating report regularly for taking different types of decisions.
In fact, financing credibility of a person is determined largely by the credit rating report of a person. While providing loans, credit ors determined the credit worthiness of a person through this report only. In countries like United States, any negative remark made in the credit rating report of a person remains for a period of 7 years and thus, it is very essential that a person maintains a good credit rating. As far as bankruptcy filing comparable time frame is concerned, it is 10 years.
There are many types of information contained in the credit rating report of a person. This includes personal information that includes past and present address, social security number, credit information and employment information. There are many other information also that are contained in the above report. As far as credit information is concerned, credit rating report provides summary of the credit history of a person. Information about different types and numbers of credit accounts held by an individual are invariably contained in the credit report. These include good standing accounts as well as past due credit accounts. All the information contained in the credit rating report can be categorized into loans, credit accounts, recent inquiries, bankruptcies and late payments.
Types of credit rating reports
There are many types of credit rating reports available but mainly these are annual credit reports, consumer credit reports and business credit reports. Annual credit report is prepared by all the credit report ing agencies individually. For example, in United States, Trans Union, Experian and Equifax are three agencies that prepare annual credit report. It is not that credit rating reports are devoid of errors. There are many types of errors that have been found in these reports and affect the rating in a very bad way. Thus, it is very important that a person checks his credit rating report regularly for ensuring that there are no errors contained in the report and information divulged to the credit ors is accurate. Under the FACT or Fair Accurate credit Transaction, all consumers in United States have been given right to avail free copy of credit report once in a year from each of three credit rating agencies. For this purpose, they can log on to annualcredit report.com. Even business credit reports that provide information on credit history of business organizations can be obtained free. As far as consumer credit reports are concerned, these are prepared by the credit agencies and provide information about consumer credit history. Difference between annual credit report and consumer credit report is that latter is paid one and consumers in United States can demand for its copy at any time in a year.
Other important aspects
As said above, credit rating reports are provided by credit rating agencies or bureaus. These agencies are regulated in United States by FCRA or Fair credit report ing Act. These credit rating reports provide rating s in the form of scores which are basically a three digit scores. These are supplied by independent service providers. For example, in United States, FICO is a three digit creditscore provided by Fair Isaac Corporation. Both, credit reports and creditscores are utilized by lending institutions for determining the borrowing powers of an individual. Various factors that get affected by creditscores in a major way are interest rate, loan amount, repayment period etc. For obtaining the consumer credit rating report of a person, lenders are required to pay stipulated fee. Order for these reports can also be made online.
While obtaining credit rating report, free or otherwise, a person should check for different types of information carefully. Most important information that must be checked by a person includes history of payments, inquiries, rectification of discrepancies, credit frauds and identity theft.
credit information provided by the credit rating report includes name of the credit card issuers and other lenders banks, retailing companies etc. Personal information include name of person, his date of birth, social security number, previous and present addresses, name of spouse, if any and the past and present employers of a person. Similarly, public record information includes information on bankruptcies, tax liens and monetary judgments. There are also some types of information not contained in the credit rating report. For example, information about the savings account of a person or about the religion, medical history, political affiliation etc is not contained in the report.
In present times, apart from lenders, many other organizations are also making use of credit rating report for taking decisions. For example, mobile phone companies, government departments, etc are getting credit reports of a person from credit bureaus quite regularly.
FICO scores as mentioned above are being used by most of lending institutions for determining the credit worthiness of a person. Apart from this, there are some other important scores also that are regularly used. For example, Score Power, Plus Score and credit Score are some other scores. These are provided by Equifax, Experian and Trans Union respectively. These three credit bureaus also provide Vantage Scores.
If any person comes to know about any discrepancy while checking his credit report at annualcredit report.com, he can dispute the same to the credit bureau. These bureaus are required to investigate the matter within 45 days. It is important to note here that free copy of credit rating report obtained at annualcredit report.com is not the FICO score, but Vantage Score. Range of scores as contained in FICO vary from 300 to 850 whereas Vantage Scores vary from 501-990.
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