Information About Credit Reports
If you have applied for a loan, mortgage, or even a bank account, you are probably familiar with the term “credit report.” This complex report lists all financial obligations a debtor has agreed upon and various other facts and information pertaining to them and their credit history. A bad credit report can have a negative impact on a person’s ability to purchase a car, a home, to secure a loan, or to borrow money from a financial institution. For this reason, it is important that you understand what a credit report is and how it can impact your financial future.
What is a Credit Report?
A credit report is a summary of how you manage credit cards, loans, and various other types of accounts. These reports cover three credit bureaus. These bureaus include Experian, Equifax, and TransUnion. Each bureau will display varying information as they update their criteria and reports differently. Generally, credit reports will contain information like:
Identifying Information: The name(s), addresses, and employment will show up in a credit report. Additionally, the debtor’s birthdate and social security numbers are included as well. In fact, a credit report is typically generated by using a person’s social security number and tidbits of other information to verify their identity.
Credit Account Information: Credit reports will list all past and current credit cards, loans, auto loans, mortgages, and other financial information associated with your credit card. Additionally, it will show both hard and soft inquiries. Inquiries indicate times when you have applied for credit.
Collections Accounts: When past due debts are turned over to collection agencies, they will show up on your credit report. These include past due credit card payments, unpaid doctor bills, utility bills, and more.
Bankruptcies: Credit reports will show whether a person has filed bankruptcy. These reports will show all pertinent information surrounding the person’s bankruptcy. It will also include the date that the bankruptcy was filed and the type of bankruptcy that was filed.
How Does a Bankruptcy Affect Your Credit?
When it comes to determining how bankruptcy can impact your credit score, it is important that you weigh the pros and cons associated with this procedure. For one, not filing a bankruptcy in cases where you are overwhelmed with debts and collections can have a far greater negative impact on your creditworthiness, or how companies view your ability to manage your finances.
For this reason, countless people turn to bankruptcy to clear the negative marks on their credit reports and start over. It is important to note that the bankruptcy will show up on your credit report. In fact, information surrounding your proceedings will remain on your credit report for up to ten years. Although this information will show, it is not necessarily true that it will negatively impact your ability to secure loans or credit accounts in the future.
After filing a bankruptcy, your credit score will decrease drastically. The score will generally drop between 160 and 220 points. The good news is that this score will continue to increase over time. Within a couple of years, you should have a healthy credit score that will enable you to apply for new loans while making responsible credit choices.
How to Maintain Your Credit
Our team at Kohn Rath Danon . & Scharf, LLP has put together various “how-to” pages that can help you improve and maintain your credit while moving forward. Some of the helpful guides we provide include:
Getting Your Free Credit Report: It is crucial that you monitor your credit. Utilizing the free annual credit report is an exceptional tool that allows you to monitor changes and maintain a good credit rating. This report allows you to verify accounts and dispute things that are not accurate. You are by law entitled to one copy of your credit report annually from the major credit reporting agencies. Try the site Annualcreditreport.com for free credit reports.
How to Dispute Credit Reports: If there is inaccurate information on your credit report, it is crucial that you report it immediately. Inaccurate information can be a sign that someone has stolen your identity or obtain credit under your social security number. False, illegal, and inaccurate information can have a detrimental impact on your credit rating.
Correcting Credit Report Errors: In some cases, errors may need to be corrected. This guide will show you how to correct errors on your credit report. This can help lessen the chances of you being flagged for identity theft and can help boost your credit score and rating.
Sample Credit Report Dispute Letter: Should you notice any inconsistencies or inaccurate information on your credit report, it is crucial that you file a claim with the corresponding agency. This sample letter can be used to dispute charges or information on your credit report.