Credit Reports (cont.)

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What is Credit Rating?

The credit report will give an overall rating of your past financial history, and it is this rating that will determine whether you are deemed a credit risk or not. The better the rating, the easier it will be for you to obtain credit. If you have a bad rating, the chances are that you’ll find it difficult to obtain loans – and even if you do, you’ll probably attract a much higher rate of interest as a result. The only way to ensure that you have a good credit rating is to make sure that you pay all your loan payments (including credit cards) on time and in full. Practically the only way you can get a bad credit rating is to not pay your bills and your loan repayments so whether or not you have a bad credit rating or a good credit rating is entirely in your hands.

Who creates the credit report?

Consumer Reporting Agencies gather and compile the information that results in your credit report. They get their information from credit issuers such as banks, credit card companies, department stores and the like – anyone from whom you have received credit. They gather all the available information on an individual from all these sources then make that information available back to these financial institutions, at a cost, when they need it.

Can the credit report be wrong?

Credit reports are essentially prepared by people, so unfortunately there will always be instances of mistakes. While it might be easy to spot a mistake, there is no guarantee that it will be easy to rectify, so you should always be aware of what is listed on your credit report – particularly before you decide to apply for any loans.

How do I correct an error on my credit report?

If you discover an error on your credit report you should contact the credit reporting agency as soon as possible, and make sure that you follow up any verbal communication with written correspondence, and get confirmation back in writing. The responsibility is then theirs to confirm your assertions and to amend their records if appropriate. Unfortunately this can take some time, in some cases up to 45 days, so it’s best that you act immediately when you discover an error. You can then ask the credit agency to forward a copy of your amended credit report to any parties that have received a copy of the incorrect credit report in recent times.

If there are listings on your credit report that you feel should not be there but the agency insists that they are a valid entry, you can present a short written statement to accompany your credit report that states your side of the story. Any recipient of your credit report will also receive a copy of your statement. The statement must only cover issues of discrepancies rather than why you got into debt in the first place.