Knowledge is Power

Knowledge Is Power Credit Report Information

The extending of credit is that financial transaction in which a financial institution loans money to a customer. Generally, there is a set amount agreed upon, the signing of a legal contract, set number of payments, agreed upon interest rate, other terms, etc.

In addition, to help lending institutions, this credit information is forwarded on to three credit reporting agencies. The gathering of this credit information helps financial institutions to evaluate potential customers and determine their credit risk.

The three credit reporting agencies are Experian, Transunion and Equifax. Therefore, for the consumer it is important to know what credit report information is contained on the credit report and how that credit card information is used.

What Credit Report Information Is Reflected?

First of all, due to recent legislation, an individual is entitled to receive a free credit report. A consumer may request their credit report in a number of ways. Those ways include calling or going on line to one of the free credit report websites or to one of the three credit reporting bureaus.

Also, it is important to be aware that when the individual orders their report they maybe offered other services. These additional services may include a monthly fee that monitors and tracks inquiries made on an individual’s credit account. In addition, the consumer may be asked if they would like to be made aware of their FICO score. The FICO score is separate from the credit report and is a number that is computed using a variety of weighted indicators based on a person’s credit. Often, the FICO score will be an added charge.

When a person receives their credit report there will be, depending upon the individual’s credit activity, a number of items listed. Those items include all of the past and present credit activity that the individual has been involved with. This includes credit card activity, revolving charge card activity, loans, etc.

In addition, each of the accounts will show the recent balance owed, timeliness of payments, credit card limit in dollars, whether payments have been delinquent, which accounts are open, which accounts are closed, etc. Also, the personal information of the individual will be listed. That information includes past and present addresses, aliases, date of birth, etc.

Also, and maybe most important, the report will reflect any activity that may be false, but reflected on your credit report. If in fact there is false information on your report, including unauthorized account openings, the individual has a right to dispute that information. This is probably the most important reason to, at least annually, review a credit report.

How the Credit Report Information Is Used

The credit report information is used in a variety of ways. When the consumer checks the credit report information they are looking for accuracy and any possibility of fraud.

When a lending agency accesses a person’s credit report information they are looking for a person’s ability to honor credit contracts. Specifically they are looking at the customer’s ability to repay, according to the terms of the contract, and make timely payments.