Everything You Wanted to Know About Credit Reports
Credit reports were initially intended for lenders but have become easily accessible to borrowers in recent years. In this article, we’ll talk about everything you want to know about them.
What is a Credit Report?
A credit report is like a report card on your credit. It shows how good you have been at managing credit over the years.
A credit report isn’t to be confused with a credit score. A credit score is a numeric score of how well you have managed your credit. A credit report is so much more than that. Your credit score is one of the many items found on your credit report.
Before a lender loan you money, they will most likely want to review a copy of your credit report to see how good of a job you’ve done managing credit in the past. This, along with the other information you provide on your income and other liabilities, will help the lender determine whether to approve the loan you’re applying for.
What Else is Found on Your Credit Report?
In the top section of the credit report, identification information is found. This includes your full name, date of birth and address history. This helps the credit bureaus confirm your identity. There may be someone with a similar name as you. This helps determine you’re not the same person through your date of birth and address history.
Next, you’ll see a list of the last credit inquiries. These are for any lenders that recently checked your credit score.
Below are the meat and potatoes of your credit report: your credit account history.
Your credit account history includes detailed information on each credit account that is open and closed. It includes the type of credit (revolving, instalment, mortgage, etc.), the outstanding balance, regular payment and how long it has been open, among other things.
You’ll want to keep a close eye on your payment history. This shows how good you are at making your payments on time. Payment history counts most with your credit score, so you’ll want to make sure it looks good. A rating of “1” is ideal. It means that you made your payment on time and as agreed upon. Anything higher than that will drag down your credit score.
You absolutely don’t want to see a “9” rating. This means that the debt has been written off and likely sent to collections. Even with a good reason for this, it can still be challenging to be approved with a prime lender with the best rates if one of those is found on your credit report.
The Bottom Line
Did you have other questions about your credit report? Our mortgage experts are here to help. Please reach out to us today.