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[S258]See Your Credit Report

by Tony Francis, Ton

When you get into the world of credit, it is important that you know what a credit score is, who calculates it and from what information it is from. This three digit number could either make or break your next financial transaction. This is because the score tells the creditors, banks and other establishments whether you can be trusted to pay bills and dues or not.

One of the things you should not forget is that the credit score is calculated based on certain information found in your credit report. As much as it is important to build good credit and improve your credit score, it is imperative that you keep your credit report clean. There are generally three agencies that create credit reports for consumers. What they do is to gather most if not all the information about your credit behavior and wrap them up in a single document which is reviewed by creditors.

So before you can get your hands into improving or increasing your credit score, it will be of help to know what things you should keep your credit report clean from. By all possible and legal means, avoid committing actions that would place the following on your credit report:

Charge-offs

This is almost like delinquency accounts but is much worse than just late payments. When you miss your payments for six months or more, the creditors will place your account under the "uncollectible" category. This implies that for the longest time your creditors have waited for you to pay your dues, they are already done waiting, and finally give up. They file a "charge-off" on your account which is then included on your credit report. This is like a warning sign for those who request for your report that you are not a very good payer. This "identity" stays with you and on your report for seven years.

Debt collections

The other thing that you should not look forwards seeing when you get your free annual credit report from each of the reporting bureaus are files of debt collection. This usually goes hand in hand with the previous entry. This means that since the creditors have given up waiting for you to pay your dues, they have transferred you account to the hands of collectors. This action is also recorded on your credit report. Updating your credit report under debt collection is really up to the creditors or the collector.

Bankruptcy

If the updates on the two previous entries are on the hands of the people you owe and the collectors, filing bankruptcy is done by you. This means that you already have no financial means to pay some or even all your debts. In your credit report, each of the accounts you included in your bankruptcy declaration is included. These stay on your credit report for seven to ten years. However, you can begin rebuilding your bad credit as soon as you have paid for all your debts.

Foreclosure

Another thing you should avoid being included on your credit report is a foreclosure. A foreclosure happens when you default on your mortgage loan and the lender takes your home to auction it off to recover the amount of mortgage. This severely damages your credit report which pose difficulties the next time you apply for a loan.

Getting your credit report checked is a pretty common process. It happens every time you apply for a loan, a mortgage, a credit card, or any other form of credit. The people you are applying to borrow from check your credit to see if you are at risk of not paying them back. This is the factor on which lenders base their decision of whether or not you get the loan, mortgage, or credit card, and sometimes on which they base the interest rates by which you will be paying.

Who else checks your credit? Your employer, or a potential employer. These people have access to your credit history because some of them believe that you will handle your job the way you handle your credit, and therefore base how responsible you are on that factor. This can determine whether or not you get an important job.

There is a variety of people who have access to your credit, and these are a couple of the obvious ones. But who of all these are allowed to check your credit score are allowed to check your credit without your permission, and who of them have to have your consent? Most of them do not even have to have your authorization, but only need to have a legitimate business need.

There are certain companies who have the authority to check your credit report if they have a reason to, like banks who need to check and see if you will pay back the loan you applied for, or a credit card company who is looking to see if you will be able to make the monthly payments they require before they activate your credit card account. These people have the right, because you basically give them consent when you apply for that credit. Your rights concerning who sees your credit history and who does not are listed under the Fair Credit Reporting Act.

Potential employers or present employers are allowed access to your credit report as well. However, they are only allowed to access it if you give them consent. This permission can either be given verbally or in writing, but most employers will ask you to give it in writing so that they have proof of your consent.
Other companies will usually ask for your consent. They do not necessarily always need it, but they will ask. This is often done out of courtesy to the person whose credit history they are viewing.

There are others who can access your credit history without your consent, like landlords, insurance companies, companies with which you are applying for government benefits, child support agencies, and other government agencies. Some of these are often limited to only certain parts of your credit history, like your name, address, former address, and past and present employers.

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