You can predict an adult’s behavior,
knowing the person from childhood - nothing important, but when talking about Credit Report, these words are really illuminating. Just like a teacher, who can predict the end result of a child’s development years before he/she reaches adulthood, a Credit Reporting Agency can keep track of your finances and help financial institutions make decisions when you are applying for a product.
A credit report is nothing else than a financial biography, with precious information about your entire “financial life”, and it contains data such as your current employment, address, accounts and last but not least payment history.
It goes without saying that each individual’s goal is to maintain a clean credit history and thereby benefit of the best rates when applying for a mortgage, loan or asking a higher credit limit. The slightest negative information can reduce loan options and tag you as “unworthy for credit”, or have negative consequences such as high rates on loans and insurance.
Here are a couple of common errors that can be spotted:
- You pay on time and the credit report tells something totally different.
- Your credit history includes negative information belonging to some other person.
- Your personal information is incomplete, wrong or out-of-date.
- Your account number may be wrong due to bad handling.
Preventing errors is quite easy and it involves a simple monitoring of your credit file. For those who still don’t know how they can achieve this, getting a free credit report at the end of the year is recommended, and once mistakes are spotted, immediate action is mandatory. You can ask for such a document from the three major agencies in the UK: Equifax, Experian and Callcredit.
Now that we have clarified that the credit report is nothing else than a report card about payments and identity details, let’s visualize it.
- 1st section contains a set of identifying information. Besides your name, address, phone number and tax id number it may include previous addresses or employers.
- Credit History is made up of relevant data about your debt (if any) and whom you owe. It will definitely include late payments (more than 30 days) and the total amount of credit within your account. This section will definitely haunt you for at least 7 years.
- Next section is dedicated to the public record which had better be empty. The main concern in this section would be the two financial omens: bankruptcy or court judgments.
- Last section is entirely dedicated to inquiries about your credit: no one else than the creditor can leave lasting footprints here. The soft inquiries belong to the person checking his/her account while the hard ones are generated by the creditors.
It is extremely important to have a complete view when speaking of one’s credit report. In order to be sure about the success of a future financial product (loan, mortgage, credit extension) the best advice one can get is to check with all the three major agencies.
Our team of financial advisors can help you clean your credit report or correct errors, so feel free to ask us at any time.