Understanding Your Credit Report and How it Impacts You Daily

Tuesday, February 07 at 02:25 PM
Category: Personal Finance
You may not realize how much it factors into your lifestyle, but your credit history is important to a lot of people including mortgage lenders, banks, utility companies, prospective employers and more. Don’t worry — we’ve got the answers for a few of the most common credit report questions to help you get up-to-speed!

What is a credit report?
A credit report is a record of your credit history that includes information about:
  • Your identity: Your name, address, full or partial Social Security number, date of birth and possibly employment information.
  • Your existing credit: Information about credit you have, such as your credit card accounts, mortgages, car loans and student loans. It may also include the terms of your credit, how much you owe your creditors and your history of making payments.
  • Your public record: Information about any court judgments against you, any tax liens against your property, or whether you have filed for bankruptcy.
  • Inquiries about you: A list of companies or persons who recently requested a copy of your report.
Why is a credit report important?
Your credit report is important because lenders, insurers, employers, and others may obtain your credit report from credit bureaus to assess how you manage financial responsibilities:
  • Lenders may use your credit report information to see if you qualify for a loan or credit card according to the specific financial institution’s credit policies. Consider the financial solution that gives you competitive rates and bonus rewards opportunitiesArvest Flex Rewards™ credit cards.  
  • Insurance companies may use the information to decide whether you can get insurance and to set the rates you will pay.
  • Employers may use your credit report, if you give them permission to do so, to decide whether to hire you.
  • Telephone and utility companies may use information in your credit report to decide whether to provide services to you.
  • Landlords may use the information to determine whether to rent an apartment to you.
Who collects and reports credit information about me?
There are three major credit bureaus (Equifax, Experian, and TransUnion) that gather and maintain the information about you that is included in your credit report. The credit bureaus then provide this information as a credit report to companies or persons that request it, such as lenders from whom you are seeking credit.

Where do credit bureaus get their information?
Credit bureaus get information from your creditors, such as a bank, credit card issuer or auto finance company. They also get information about you from public records, such as property or court records. Each credit bureau gets its information from different sources, so the information in one credit bureau's report may not be the same as the information in another credit bureau's report.
How long does negative information, such as late payments, stay on my credit report?
Generally, negative credit information stays on your credit report for seven years. If you have filed for personal bankruptcy, that fact stays on your report for ten years. Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. Information about criminal convictions may stay on your credit report indefinitely.
How can I get a free copy of my credit report?
You can get one free credit report every twelve months from each of the nationwide credit bureaus – Equifax, Experian, and TransUnion by:
You will need to provide certain information to access your report, such as your name, address, Social Security number and date of birth.
You can order one, two, or all three reports at the same time, or you can request these reports at various times throughout the year. The option you choose will depend on the goal of your review. A report generated by one of the three major credit bureaus may not contain all of the information pertaining to your credit history. Therefore, if you want a complete view of your credit record at a particular moment, you should examine your report from each bureau at the same time. However, if you wish to detect any errors and monitor changes in your credit profile over time, you may wish to review a single credit report every four months.

Does the credit bureau decide whether to grant me credit?
No, credit bureaus do not make credit decisions. They provide credit reports to lenders who decide whether to grant you credit.
As you understand why credit reports are important, where the information comes from, how long the information stays on the report and where you can get a copy of your credit report, you’ll be better prepared to make financial decisions.
Information courtesy of the Federal Reserve Board.

Links marked with * go to a third-party site not operated or endorsed by Arvest Bank, an FDIC-insured institution. 

Tags: Credit History, Credit Score, Financial Education
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