Credit Bureau
A credit report or credit profile records a customer's credit payment history. If you ever had a credit card or mortgage loan your payment record and repayment history will be included in your credit report. Credit reports are very useful for mortgage companies and other lenders. Your credit rating is an indicator of your credibility based on their past performance. You should take all necessary steps to ensure that you have an immaculate credit rating because it will help you to avail better terms and lower interest rates. You can (potentially) save thousands of dollars if you take care to maintain your credit history. Since credit bureaus include even the smallest mistakes in your credit report you should try to avoid them to the maximum possible extent. There are a number of different credit bureaus around the world. Every country has its own credit bureaus that maintain and sell customers’ credit reports. The three most well known credit bureaus of the United States of America are Equifax, TransUnion and Experian (formerly TRW).
Your Credit Score – A Measure of Your Responsibility with Money
Credit bureaus measure the level of a person’s responsibility with money. Your credit score is a reflection of this responsibility and gauges the probability of default on a loan. It includes all your credit related information including if bankruptcy, foreclosures, late payment, prepayment penalties etc. Credits bureaus facilitate mortgage lenders by help them see you creditworthiness from a realistic view point. Imagine how much time it would take to process a mortgage loan if your mortgage lender had to collect all credit related information and compile each borrower’s credit report. It is nearly impossible and even if we assume that it was possible credit reports compiled by a mortgage lender can still have mistakes because of which you might be wrongly denied credit and vice versa. All mortgage lenders would have to compile each customer’s credit report on their own and the costs incurred might not even be worth the effort in case the mortgage loan is denied to the customer. People with bad credit scores find it increasingly difficult to find a mortgage lender ready to extend them a mortgage loan with reasonable (and affordable) interest rate and terms and conditions.
Four Ways of Getting Your Credit Report for Free
Following are four ways in which you can get your credit report for free:
- If you have been (recently) declined a mortgage loan on credit card you can request a copy of your credit report from the credit bureau contacted by the lender. Do not forget to attach a copy of the declined loan application with your request for your credit report.
- You are also entitled to a free credit report in case you are unemployed and are currently looking for jobs and public welfare assistance. Credit bureaus are liable to provide you a free copy of your credit report if (you believe) it has mistakes and does not reflect your true credit score.
- Some states in the United States of America offer free annual credit reports to all their customers from all three credit bureaus. These among others include Colorado, Maine, Massachusetts, Maryland, New Jersey and Vermont. Residents of Georgia are entitled to two free annual credit reports from each credit bureau.
- You are also entitled to a free credit report from all three credit bureaus under Federal Law if you have been a victim of identity fraud.
Legislation for Regulating Credit Bureaus - Fair Credit Reporting Act
All three large credit bureaus of the United States of America (i.e. Equifax, TransUnion and Experian) are regulated under the Fair Credit Reporting Act. Fair Credit Reporting Act is required to provide accurate information to mortgage lenders to enable them to fairly assess the creditworthiness of each customer while processing their mortgage loan application. A customer has the following rights under the Fair Credit Reporting Act:
- The right to know all information (and its sources) included in your credit report.
- The right to know the name address and phone number of any person or entity who has received your credit report in the past year.
- The right to receive a free copy of your credit report whenever you deny credit because of information contained in your credit report provided by one of the three credit bureaus.
- The right to add a 100 words summary to your credit report if a mistake or dispute (such as wrong information or information from unauthentic sources) is not resolved to your satisfaction.
- The right to remove information negatively affecting your credit score after a minimum of seven years. However minimum duration for bankruptcy and foreclosures is 10 years.
Thus credit bureaus play an integral role in our current financial system. If we take credit bureaus out of our current financial system the mortgage loan process would become too lengthy and cumbersome making it more difficult for people to access mortgage loans. You should take all necessary measures required to sustain your credit scores at high levels because it will determine whether or not you will be provided credit when you need it the most. Experts suggest numerous tactics that can help to improve your credit score and will help it stay healthy. The simplest suggestions given by most experts include paying your bill on time, keeping your account balances low and obtaining new credit only when you direly need it. People who follow these simple steps are reported to have consistently high credit scores. And higher your credit score lower will be the interest rate on your mortgage! Your should review your credit score at least six to seven months before you plan to start shopping for a home mortgage because this will give you time to smooth out potential mistakes that you might have made and boast your credit score to the desired level.