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Credit Reports

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A credit report is a record of all your credit activities. It lists credit cards and other credit accounts, balances, payment history, and any actions that have been taken against you.

Lenders use credit reports as a barometer of credit-worthiness. Based on your credit history, lenders will decide how much credit to extend, if any, and at what interest rate. Because of this, your credit report and its contents can affect your purchasing power when applying for a mortgage, auto loan, credit card or other line of credit.

Measuring Credit

The most common way to measure a person's credit is through the Fair Isaac Corporation's FICO score. The FICO score is used by the three major credit bureaus to express a person's credit worthiness.

Under FICO, credit scores range from 300 to 850, with higher numbers showing increased worthiness.

While the exact formula to measure a credit score is not publicly known, a person's FICO score is a reflection of their credit usage, total amount of credit, length of credit history, on-time payment history, past applications and credit diversity, with on-time payments and capacity used having the biggest influence.

What is on a Credit Report?

Your credit report contains information about your credit history, as well as personal information, such as Social Security Number, work history, past addresses, and recent inquiries into your credit report.

Additionally, if you're married, your credit report may contain similar information about your spouse.

Who Can Access Credit Reports?

Despite the very personal information that is contained in a credit report, they are available to a wide variety of people. Any creditors considering extending a line of credit can view your credit report, as can anyone involved in a current line of credit.

Employers may view your credit report when making a decision about hiring, promotion, relocation or retention.

Government agencies may view your credit report at pretty much any time.

Insurance agencies may view your credit report when reviewing your policy. Insurers have found a high correlation between a person's credit score and the likelihood that they'll file a claim. Therefore, your credit report may greatly influence your premiums for home insurance, car insurance, and other forms of insurance.

Potential landlords, who depend on your ability to make timely and regular payments, may also view your credit report, as can anyone with a legitimate business need.

Basically, the door is wide open for your credit report to be viewed, and important decisions to be made based on its contents. Everything from where you live to where you work may hinge on the contents of your credit report.

Credit Reports After Bankruptcy

Typically, a personal bankruptcy filing may stay on a person's credit report for up to 10 years. While that may seem like a long time, that does not necessarily mean that you will not be able to receive any credit, rent an apartment or keep a job during that time.

There are many ways to build credit after filing bankruptcy. However, it is also important not to fall into the same traps that led you to bankruptcy during this time. Learning healthy credit practices is one aspect of the new bankruptcy law, which requires Credit Counseling and Debtor Education courses before receiving a debt discharge.

Obtaining Your Credit Report

Due to the important information that is contained on a credit report, the government has made it easy to view your report from the credit agencies and dispute any irregularities.

At the government web site, you can order copies of your credit report from the three main credit reporting agencies: Equifax, Experian and TransUnion.

Each person is allowed one free copy from each agency every 12 months.

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