A credit bureau or credit reporting agency collects and stores credit information on consumers who use credit. A consumer credit report is a factual record of an individual’s credit payment history. It is provided for a purpose permitted by law, primarily to credit grantors. Its main purpose is to help lenders and creditors quickly and objectively decide whether to grant a credit request. Examples of credit that are almost always based on credit report data include car loans, credit cards and home mortgages. The data in a credit report is used for credit score companies to determine credit scores and credit scores range.
A typical credit report includes: the individuals name, current and previous addresses, Social Security number, date of birth and current and previous employers. The information in a credit report comes from your credit applications, so its accuracy depends on the data contained in credit applications each time you apply for credit.
A credit report also contains specific information about each credit account opened by the individual covered by the report. Credit account information includes data such as the date the account was opened, the available credit limit or loan amount, balance, monthly payment and payment pattern during the past several years. This information comes directly from the creditors and companies that do business with the individual the credit report is on and the data is delivered to the credit reporting agencies voluntarily.
A credit score is a number that summarizes the data in a credit report an attempts to rank the credit risk of the individual. It is generated through statistical models using elements from the individual’s credit report. Credit reporting agencies track a large amount of information about you and from that gives you a credit score. Your score is only as good as the information in the report. What is a good credit score will be dependent on how the credit score is being used by the lender or creditor
The credit score is not stored as part of an individual’s credit history on the credit file. A credit score is created at the time a request is made by a creditor or lender requests a credit report and a credit score. Your credit score speaks for you and impacts your financial health and just about every aspect of life.
Since the credit score is based on data in a credit report and the credit score is calculated when the there is a request for the score, a credit score is a fluctuating number. An individual’s credit score will changes as the data in the individual’s credit report changes. If the consumer’s payment history, credit balances change or if a new account is created these actions will likely cause a change in the credit score.
For those individual that discover they have a poor credit score, lenders may or may not automatically refuse credit and may extend credit at a much higher interest rate than people with good credit. So, you will pay more for the same car or same priced home than others people. If your credit is poor there are ways to improve your credit score and how to improve credit score is easy.
