If you are just now delving into improving personal finances, then you will often across the term credit report.
In this post, we explain what a credit report is, what it includes, and how you get approved for loans even with a poor financial history.
Here at Loan Away, our goal is to educate people how to use money properly. Keep reading to find out some useful tips and trick regarding poor credit.
How Can Someone Get A Credit Report?
Your credit report contains details on personal financial history. This report is created by a credit bureau. In Canada, there are 3 major bureaus through which a report can be obtained. These are Equifax, Experian, and TransUnion.
The bureaus collect information to form the report. The information includes personal details, bill paying habits, borrowing activity, current credit situation, etc.
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Loans and Reports
These reports are used to determine an individual’s responsibility and ability to pay back money in case they apply for loans or mortgage. Financial institutions like banks and other lenders will demand a report when you seek to borrow money from them.
The 3 bureaus obtain similar information to create the reports, but it is common to notice slight differences. When you want your report for examining it or submitting it for loan approval, you have to pay. However, every individual is entitled to 1 free report per year according to Canadian law.
What is Included in a Credit Report?
A report may include the following items:
- Personal Information such as name, current and previous addresses, date of birth, phone numbers, email addresses, and social security number
- History of credit accounts, current accounts, type of accounts
- Credit limit and account balances
- Payment history associated with each account
- Dates accounts were opened and closed
- Name of the lenders
- Public records such as liens, bankruptcies, foreclosures, and civil suits and judgments
- Public information may also include child support that is overdue and provided by a state, local child support agency, verified by any local state or federal government agency
- Details on companies that have accessed your report
Importance of Credit Report
You will be surprised how many times your credit report is checked to determine your credibility. It is not just banks using it to approve an individual for a loan or mortgage. Some businesses check the report to make decisions about the report owner.
Landlords will examine the report to determine if a potential tenant can pay rent on time. Furthermore, employers have also been using reports as part of the employee hiring process.
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Most importantly, a report is what contains your credit score. This 3-digit number is used by lenders to decide whether you can pay back borrowed money or not. A higher score means that you have more positive information in the report. On the other hand, a lower score means mention of more negative entries.
Is it Possible to Improve Bad Credit?
Many people, nowadays, are suffering from a poor credit report. Fortunately, it is possible to improve it. While there are quick fixes, typically a report needs time and persistence to be made better in the long run.
The very first step to improve a report is to have access to it. If you don’t have one in possession, you should request it. Afterward, examine the report thoroughly and find what you are lagging in. You can then find methods of improving the score accordingly.