FREQUENTLY ASKED QUESTIONS ON CREDIT REPORTS


1) What is a credit report?
A credit report is a record of a persons credit payment background. This kind of information is obtained from a consumer credit database, which shows the accounts (i.e. credit cards, mortgages, car loans) you are involved in or have entered in the past. Lenders and creditors use this to help decide whether an individual is eligible for credit or a loan.

2) What does a credit report contain?
Four items. Your personal information, credit history, public information and credit inquiries (including the names of those who got a copy of your credit report for whatever reason).

3) What kind of personal information is in this report?
The information you normally give out when you apply for credit; that is, your name, the name of your spouse, if any, date of birth, present and previous addresses, past and present employers and your social security number, among others. Therefore, whenever you apply for a loan or anything related, make sure the information you write is consistent with what you have given to others.

4) How long do these information remain on my credit report?
Negative information, like late payments, stay on your credit report for a maximum of seven years. This allows you to start on cleaning slate and stop your past from dousing your chances of gaining credit in the future. Contrarily, and fortunately, all positive information will stay on your report for an indefinite time.

5) Ive declared bankruptcy in the past. Will affect my credit report for a long time?

This depends on the type of bankruptcy you filed. Chapter 7, 11 and 12 bankruptcies stay on record for about ten years, whereas Chapter 13 bankruptcies stay only for seven years.

6) What about the inquiries to my credit history?

It depends on the type of inquiry. Usually, they stay on record for about one to two years.

7) Can I view my credit report?

You can request for your own copy anytime.

8) Who else has the legal right to view my credit report?

Only agencies or companies concerned with your government license application, credit or loan application, insurance application or employment/promotional status may legally see your credit report, unless you have personally written so. Your credit report may also be viewed if requested via a federal court order or subpoena.

9) What do lenders look for when they view my credit report?

While creditors look at different factors to determine whether you qualify for credit or a loan with their institution, they agree on one thing: Do you have the ability to pay them back? When they view your credit report, lenders will look at your income, years of stay at your present residence, years of employment with your current employer, how much your assets are worth, how much you have in the bank, if you have been paying bills consistently and on time, and how much you owe others.

10) What are the three Cs of consumer credit?

Lenders zone in on these factors when they study your credit report: Character, Capacity and Capital/Collateral.

Financial character is determined by the number of years youve stayed at your present address and worked under your current employer. This can also be determined by your present credit relationships, such as bank loans, mortgages, credit cards, etc.

Financial capacity gives lenders an idea of your ability to pay them back based on your current debts, living conditions and other existing payments.

If you have sufficient capital or collateral, or if your loan application can be secured against an asset or a down payment, you lender will find it easier to approve your credit application.