Credit Reports And Its" Myths
What are the credit reports and it's importance in our daily life?
I get this question very often from my readers. Before I answer this, it is important to understand that these reports are maintained by an agency called credit bureau.
What are the Credit Bureaus? Well, credit bureaus maintain your credit history. They have almost all the agencies or vendors or suppliers or traders as their subscribers. What does this mean to me? Well whenever you apply for a credit card, your application becomes the part of your credit record. All the basic information supplied by you e.g. your name, date of birth, address, Social Security Number etc, become the foundation of your credit report.
Is it possible to get access to my credit report? If I do get access, can I check what various businesses or banks have been reporting about me to credit bureau?
While writing about these type of articles, I have often received few emails asking variety of questions on issues related to their credit. Most of the time, I noticed that I can group these questions in five groups. I hope that by sharing answers to these five questions, I can help my readers better.
Myth#1: The Credit Bureaus are required to keep derogatory remarks on your credit report for 7 to 10 years as per the law.
Fact: Is it true? The big answer is NO. Let me repeat for the benefit of the readers from USA and Canada that there is no such law. In fact the credit bureaus are required to automatically remove any such remarks from your credit report every few years as per the law. The definition of few years vary depending on your state or province within USA and Canada.
Myth#2: My friend said that it is illegal to remove any credit history information or alter any credit report information in the file.
Fact: The purpose of the law is to protect consumers from any type of intrusions from any credit bureau. You should also keep in mind that it is our right that we interact with these agencies and get any misinformation or misleading record fixed.
Myth#3: If I pay my past due debt, then my credit history will be fixed immediately.
Fact: First of all it is always good to pay back to any creditor in time. If you are late, then you should communicate back to creditors sharing with them why you need more time. In majority of the cases, if you are honest and reasonable, your creditors will help you because their objective is to get the money back even if you are late. By paying your past debt, you reduce your number of days of the 'debt in delinquency' record. This means that your record can be improved early if you paid early.
Myth#4: Any type of inquiries are not harmful to my credit score so I can keep shopping around for credit cards or any other such credit products.
Fact: If there is a normal frequency of the credit inquiry, it is not harmful. But if you shopping aggressively for mortgage or any other such product, then it can impact your credit standing. So be very careful for any such inquiries and you should go to mortgage consultants who do shopping for you based on only one inquiry. If you go to different service providers, then each mortgage service provider will request for an inquiry which will hit your credit records.
Myth#5: Bankruptcy can not never be taken out from the credit records.
Fact: Bankruptcies are similar to any other derogatory items e.g. bad credit, poor credit, non-payment of a debt, etc. on your credit reports. You should always consult a lawyer or a consultant before you consider announcing bankruptcy. That consultant will guide you by sharing all the pros and cons of taking that action.
We should always check our credit history frequently so that we can keep our credit score in good check. If our credit score is good, then we can get many benefits like lower interest payment, more loan options etc.
So in summary, we should consider our credit report as our life score card and keep a close eye so that we keep winning all the matches in our life.
I get this question very often from my readers. Before I answer this, it is important to understand that these reports are maintained by an agency called credit bureau.
What are the Credit Bureaus? Well, credit bureaus maintain your credit history. They have almost all the agencies or vendors or suppliers or traders as their subscribers. What does this mean to me? Well whenever you apply for a credit card, your application becomes the part of your credit record. All the basic information supplied by you e.g. your name, date of birth, address, Social Security Number etc, become the foundation of your credit report.
Is it possible to get access to my credit report? If I do get access, can I check what various businesses or banks have been reporting about me to credit bureau?
While writing about these type of articles, I have often received few emails asking variety of questions on issues related to their credit. Most of the time, I noticed that I can group these questions in five groups. I hope that by sharing answers to these five questions, I can help my readers better.
Myth#1: The Credit Bureaus are required to keep derogatory remarks on your credit report for 7 to 10 years as per the law.
Fact: Is it true? The big answer is NO. Let me repeat for the benefit of the readers from USA and Canada that there is no such law. In fact the credit bureaus are required to automatically remove any such remarks from your credit report every few years as per the law. The definition of few years vary depending on your state or province within USA and Canada.
Myth#2: My friend said that it is illegal to remove any credit history information or alter any credit report information in the file.
Fact: The purpose of the law is to protect consumers from any type of intrusions from any credit bureau. You should also keep in mind that it is our right that we interact with these agencies and get any misinformation or misleading record fixed.
Myth#3: If I pay my past due debt, then my credit history will be fixed immediately.
Fact: First of all it is always good to pay back to any creditor in time. If you are late, then you should communicate back to creditors sharing with them why you need more time. In majority of the cases, if you are honest and reasonable, your creditors will help you because their objective is to get the money back even if you are late. By paying your past debt, you reduce your number of days of the 'debt in delinquency' record. This means that your record can be improved early if you paid early.
Myth#4: Any type of inquiries are not harmful to my credit score so I can keep shopping around for credit cards or any other such credit products.
Fact: If there is a normal frequency of the credit inquiry, it is not harmful. But if you shopping aggressively for mortgage or any other such product, then it can impact your credit standing. So be very careful for any such inquiries and you should go to mortgage consultants who do shopping for you based on only one inquiry. If you go to different service providers, then each mortgage service provider will request for an inquiry which will hit your credit records.
Myth#5: Bankruptcy can not never be taken out from the credit records.
Fact: Bankruptcies are similar to any other derogatory items e.g. bad credit, poor credit, non-payment of a debt, etc. on your credit reports. You should always consult a lawyer or a consultant before you consider announcing bankruptcy. That consultant will guide you by sharing all the pros and cons of taking that action.
We should always check our credit history frequently so that we can keep our credit score in good check. If our credit score is good, then we can get many benefits like lower interest payment, more loan options etc.
So in summary, we should consider our credit report as our life score card and keep a close eye so that we keep winning all the matches in our life.
Source...