A credit report is a document containing critical information about an individual. It includes name, addresses (current and previous), NIC number, employment information, birth date and year, credit history and legal information. In addition to this, information that cannot be included in the credit report is medical information, age, race and bankruptcy date that is 10 years old (if any). As the credit reports contain information that can be subject to a lot of privacy issues, therefore it is of utmost importance that people should maintain a constant check on the content of the reports.
The information included in a credit report is used to calculate the credit score of a person, which is a statistical calculation signifying the creditworthiness of a person.
This credit score is then further used by the lending institutions to judge the creditworthiness of a borrower. The limit of credit and interest rate is determined according to the analysis portrayed by credit scores. In case a person feels for a need to improve upon a credit score to either get benefit of lower interest rates or higher level of credit limit, there are many institutions to provide help to them.
Numerous steps which are involved in improving a credit score include; checking credit reports occasionally, paying the payables promptly, frequently using the credit facilities, restricting the amount of credit card debt and also the percentage of usage to a certain level and then lowering it even further, usage ratio nearing the credit limit makes lenders uncomfortable, and mostly importantly avoiding any new credit facilities i.e. credit cards more than a person requires.
Once a bad credit score is earned, a customer losses all hope and continue getting higher rates and fees instead of compelling the negative reputation and taking corrective measures to settle for a good scoring. Credit repair is a mechanism whereby customer gets a chance to wipe out the old bad records and start clean again. A customer shall close the old records and give a fresh start to his credit information. Moreover, the customer shall negotiate with the previous lenders and come to mutually beneficial terms such as paying back in installments. Another issue comes into consideration when credit information is misinterpreted by credit scoring agencies. For this, the customer is required to keep a proper check on records available with all the agencies that are present and make amendments, as and when needed. It is also important to order a copy of report one or more months before any credit request, so that there is ample to time to correct any information misinterpreted. To rebuild a credit score and amending the report means putting an effort to stop the bad credit habits but even more important is that a customer does not repeat any activity that goes against the rules and become liable for further penalty.
A customer has now been privileged to obtain a copy of free credit report from all the agencies that are available in the country but not all can be obtained at one time except when a person has doubt about misinterpretation, is unemployed, is denied a credit or a revision has taken place following the customer’s request.
For customers who have difficulty in managing their debt profiles, credit counseling is provided by functional institutions which educate the customers and help them devise techniques to negotiate with creditors. Credit counseling often comes at immense relief of customers when they are able to repay debt on favorable terms, on reduced rates and fees. These agencies in return get compensated by creditors for getting their payments back, acting as their collection wings.
