WHAT IS A CREDIT REPORT?

What is a credit report? A credit report is a document detailing your own credit history. In other words, credit bureaus collect information and create reports based on that information. Subsequently, lenders use the findings along with other details to determine a loan seeker’s credit worthiness. Each of these reporting companies collect information about consumers’ personal details and their bill-paying habits to create a unique report for each individual.

Identifying Information

Your name, address, Social Security number, date of birth and employment information are used to identify you. These factors, however, are not used in credit scoring. To clarify, updates to this information come from information you supply to lenders.

Trade Lines

So, these are your credit accounts. Above all, lenders report on each account you have established with them. For instance, they report the type of account (bankcard, home loan, etc), the date you opened the account, your credit limit or loan amount, the account balance and your payment history.

Credit Inquiries

When you apply for a loan, for example, you authorise your lender to ask for a copy of your credit report. Consequently, this is how inquiries appear on your document – each South African citizen is entitled to one free credit check a year. The inquiries section contains a list of everyone who accessed your credit report within the last two years. That is to say, the report you see lists both “voluntary” inquiries, spurred by your own requests for credit, and “involuntary” inquires, such as when lenders order your report so as to make you a fair and mutually beneficial credit agreement.

Public Record and Collections

Moreover, the Public Record and Collections agencies also collect public record information from state and county courts, as well as information on overdue debt from collection agencies. Public record information includes, for example, bankruptcies, foreclosures, suits, wage attachments, liens and judgments.

So, what is a credit report? In short, a credit report is much like a score card or test result. Your future financial dealings will all involve this in some way or another when taking credit. Therefore, be sure to keep a good record and maintain a strong credit score as this is the best way to ensure a solid financial capability.