Some people cringe when they hear the words “credit report”.  The only reason you will try to avoid seeing such report is when you are very much aware of your poor credit score. But what is this thing that sends shivers down your spine at the mere sight of it? A credit report is a record of borrowing and repaying transactions of individuals and companies. This may seem quite an innocent set of information that does not harm anybody, however, it also includes information about late payments of credit as well as bankruptcy. In short, it is the record of your credit-worthiness. This will not matter so much if you are currently very liquid and has no need to borrow money from various financial institutions. On one hand, the report will and always be important if you are knocking on creditors’ doors for a loan.

The information in the credit report is enough for banks, credit card companies, and similar institutions to assess your financial situation and can easily approve or decline loan applications.  There is really no reason to be afraid of such document and you don’t need the banks to tell you how good or bad your credit history is because you can access a free credit report. Some people have this notion that only companies in the financial services industry have access to people’s credit score. This is entirely wrong. In fact, under the federal Fair Credit Reporting Act, nationwide consumer reporting companies are required to give you a free credit report once every 12 months, upon your request. That way, you can initially gauge your chances of getting approved for loans and save on grief and disappointment. You can get your free credit report from the following consumer reporting companies: Equifax, Experian, and TransUnion. You are not required to buy anything to get your credit report.

Not many people are aware of how these companies are able to get hold of your confidential credit information. Be rest assured that they got the necessary information by legal means and did not involve any questionable acts. So, how are they able to create your credit report? It’s important to keep in mind that these companies can only have the report if you provided the information in the first place. When you fill out an application for a loan or a credit card, everything in that application is forwarded to a credit bureau. The bureau then matches the information such as the name and address to the bureau’s database. So, when you think about it, your credit report is actually made by you through the transactions and applications made over time. If you haven’t been paying your obligations on time, then this information will reach the credit bureau and automatically becomes a part of your credit history. This is an important fact to keep in mind. The next time you are about to miss a loan payment, think of your credit report and you will find a reason not to miss it. After all, it’s your credit-worthiness that’s at stake.

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Working in the financial industry for many years had made me more aware of my credit report. Back then, I normally would not bother getting a report because I was confident that the information there are quite spot on to my own experience. I just can’t be bothered requesting for one even though I know that I can get a free copy once every 12 months from the authorized consumer reporting companies. I reckon if I pay my credit card bills and mortgages on time, there is no need to check my credit report. I was also confident enough to believe that any time I apply for a loan, I will get it because my credit standing is impeccable. But as the years go by, there have been many incidences of people getting low credit scores even if they never miss payments on their obligations. It shows that there might be some discrepancies. This is enough reason for me (or anyone else) to get my credit report and verify its accuracy based on my own records.

Not many people are aware that federal and state laws mandate that individuals have the right to access their credit reports. It is then strongly recommended that you at least review your credit reports regularly to check for accuracy. When I started to check my credit report on a regular basis, I was able to see that the information is accurate. Only then I felt relieved and assured that no sneaky character is using my information to get a loan off my accounts. Let’s face it, theft identity is rampant nowadays and one way to check if you are a victim of one is to review your credit report.

Remember that your credit report can only be accessed by people or institutions with a legitimate business use for it. The following may be interested to know your credit history: lenders, creditors, landlords, insurance companies, employers, potential employers (with your consent), child support enforcement agencies, government agencies, and other companies with which you have a credit account with. Other than those listed should be treated as suspicious. In some states, you are allowed to freeze your credit report so that it can only be accessed at certain situations. This is one way of protecting yourself from possible identity theft, but carefully reviewing your credit report regularly can help correct information about you if you have suspicions of identity theft or fraud.

It takes so little effort to check how accurate your credit report is. You can even have it for free if you request for it. It a whole lot easier to prevent some things from happening rather than fixing things when they get broken. This is particularly true when you find out that you are a victim of identity theft. The credit report agencies mentioned above are forbidden to compile and sell information for direct marketing purposes. Doing so can have an adverse effect on people’s credit report should some con man attempt to use someone else information to obtain a credit.

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