Last Updated on October 6, 2020 by Nexus Financial
Consumer Credit Report Overview
Your consumer credit report is available for all the world to see. Basically anytime, anywhere, anyone can read it by just a click of a button. Also, it not just one, but three different consumer credit reports that tell your financial story to the curious.
Imagine all the things it tells the world about you. Specifically, does it tell the right story about you? Likewise, not certain what story it is telling the world?
Is it important for you to know? In a word, absolutely. Therefore, to help you understand the importance of your consumer credit report, we’ll provide you an overview of what it is, what it tells anyone who wants to know, and what it means for your life.
DISCLOSURE: Nexus Financial Services is a provider of small business working capital and consumer financing services.
Consumer Credit Report – The Basics
Whenever you have requested credit from a lender, for whatever reason, that is noted in your consumer credit reports. Consequently, each payment or non-payment that you have made to a creditor is recorded in your consumer credit reports.
Credit Report Data Lasts A Long Time
Let’s be clear so that there is no misunderstanding. All of your credit activities are retained in your consumer credit reports for a period of at least seven years. For example, that late payment three years ago when you were traveling. Likewise, that credit card application five years ago? While you may have forgotten, the credit bureaus haven’t and it’s all there for all to see.
In the eyes of a potential lender, employer, car dealership or anyone who wants to know more about your character and behavior, your credit report pretty much defines you. So, if you thought social media was revealing, think again.
1 – Consumer Credit Report Contents
All consumer credit reports contain the same four categories of information.
Your name, address, Social Security number, date of birth and employment information. However, this information is NOT used in calculating your credit score.
As you would expect, your credit accounts, organized by type (bankcard, auto loan, mortgage, etc.), date opened, credit limit or loan amount, account balance and payment history.
These are requests for your credit report within the last two years. Basically there are two types of inquiries: hard inquiries and soft inquiries.
A hard inquiry is when a lender or third-party checks your credit report or score when you apply for credit with them.
A soft inquiry typically is when your credit reports and scores are pulled without you applying for credit. For example, when a credit card issuer sends you a pre-approved offer, or when you request your own credit reports.
Your credit scores only consider hard inquiries.
These are delinquency information from missed payments that have been reported by lenders. Also, this includes information on overdue debt from collections agencies, and public record information (bankruptcies and foreclosures).
2 – Are Your Consumer Credit Reports Accurate?
By law, information reported about you to the national credit bureaus must be fair, accurate, relevant, substantiated and verifiable. Unfortunately that is not always the case. So, while the credit bureaus are in the business of providing accurate credit information to their customers, they are dependent on the quality of information provided to them.
Credit Report Errors
A recent Federal Trade Commission report found that 21 percent of American consumers had a confirmed material error in at least one of the credit reports issued by the three credit reporting bureaus. Accordingly, a confirmed material error involves information that, when corrected, changed the consumer’s credit report.
You may be in this group. So, how to find out? Specifically, you can and should request a FREE copy of your consumer credit reports once a year.
Credit Report Repair
If you do find errors, you should obviously fix them. Because the importance of fixing errors on a credit report is that they will result in lowering your credit score. Consequently this can prohibit you from taking out loans, getting a credit card or securing any form of lending.
The consumer credit report repair process can take time.
3 – Is Your Consumer Credit Reports Accuracy Important?
Based on the accuracy of information in your credit reports will determine your credit scores. So bad data in usually results in bad credit scores.
Your credit scores are used by any potential lender as a predictor of your consistent, on time repayment of credit debt. Significantly, they simplify and summarize your credit reports data to a commonly accepted and understood credit quality number range (excellent, very good, good, fair and poor)
How It Impacts You
Looking to get a low interest credit card or need to get a new auto loan? Likewise, do you want to get that home mortgage loan before the rates go up? Because your credit reports data and resulting credit scores will determine whether you get approved for that loan and at what cost.
Note that the financial credit models that the credit scoring companies use do not consider any personal information of the debtor. Accordingly, your credit score is completely transparent and impersonal.
Right or wrong, good or bad, your credit score determines your credit worthiness.
Conclusion – Consumer Credit Report
Your consumer credit reports provide a detailed history of your financial life. Basically anyone who wants to see just needs to push a button.
For creditors it will determine whether you get approved for credit and at what cost. When applying for employment, it provides a perspective of your responsibility, trustworthiness and maturity. Also, for your life and family, your consumer credit report may define the range of options that you have as it is related to credit options.
An overview of consumer credit report is presented. Specifically this includes 1) What Is A Consumer Credit Report; 2) Consumer Credit Report Contents; 3) Consumer Credit Report Accuracy; and 4) Why It Is Important.