What You Should Definitely look in your copy of Credit Report ?
It is always recommended that you check your credit report once before applying for a loan in order to avoid any ugly surprises later. Still, many of you ask for a copy of your credit report but do not know how to read it.
You may think being bombarded with an inordinate amount of information will take ages to read. Well, it includes the most relevant information used in determining your credit score.
How to peer at your credit file
Here is what you should look for in your credit report:
- Personal information
The personal information is the first section of your credit report that reveals your:
- Current name
- Social security number
- Date of birth
- Current address
- Previous address
- Contact number
- Employment details
Personal identifying information will be unique in all cases.
Different spellings of your names are common. Variations are the result of different names, such as maiden or married names and with and without middle names used on credit applications. If employment details do not pop up, you do not need to worry about it.
Lenders may ask you for it when you apply for a loan. Watch out for the address. If you do not recognise your address, it is a red flag. Someone has opened a fraudulent account using your personal information. This is a case of identity theft.
In the event of a default, your credit score will get hurt. Report the identity theft to credit reference agencies if it is the case.
Credit accounts
This makes up a large proportion of your credit report information. It will list all accounts like open accounts, closed accounts, and default accounts, along with a summary like who and when opened the account or closed the account.
Read it carefully and ensure that you recognise all accounts. Your credit file will disclose the name and address of a lender or creditor with the opening date of the account, types of accounts and status of accounts.
In addition to default accounts, you will also see negative information like late payments. Your credit report will also disclose if the account has joint owners and the closing date of the accounts into the bargain. In fact, you will also get to know the date when the balance is reported to be recorded.
It is likely that your credit report shows the balance even if you have paid it on time. It might be due to the reporting of before the billing cycle ends. Look out for other errors like defaults and late payments despite on-time payments.
If you spot any incorrect information, you should report it to credit reference agencies immediately. This may take a few days to fix the errors as they will verify it from a lender first.
Avoid applying for a loan unless you get them fixed. Otherwise, you will end up with loans for bad credit in Ireland despite a good credit score.
Credit Inquiries
Credit inquiries have a significant role in your credit score. The higher the number of inquiries, the lower the credit score will be. While submitting application for a loan, a lender checks your credit file. This leaves search footprints.
There are two types of inquiries – hard and soft. The former is mentioned on your credit report and will temporarily affect your credit rating. Even if you are applying for a payday loan, you cannot ignore it, as it is a part of the application process.
There will be no appearances of soft inquiries on your credit report and hence do not affect your credit rating. This is the case when you check your credit report on your own or when a lender checks it to give you a pre-approval letter.
If you apply for a loan through a broker, they will also run a soft credit check. A hard credit check is run when your application is sent to potential lenders matching your requirements.
Pay heed to hard inquiries, which can harm your credit file for the couple of years. Make sure you identify the name and address of a lender.
Why I cannot see my credit score?
Credit reports usually do not include your credit score, but the information that they record helps determine your score. Many people are under the impression that they will get to know their real credit score after checking their credit reports.
Credit scores could be available if someone paid to access the credit report, and lenders are the potential people who can do it to evaluate if you have the potential to pay back the debt.
Lenders use their own formula to calculate your credit score based on the information they find on the Central Credit Register.
However, it does not signify that you cannot see a credit score. Various online sources are out there that will let you know your score absolutely free.
It is a convenient way to see your credit health and find ways to do it.
Here is the information that your credit report will not comprise:
- The date when your employment started and ended, so no history of unemployment
- Your salary (you will have to submit your financial documents to your lender separately)
- Marital status and your significant other’s credit score
- Your assets, including investments and pension scheme contribution etc.
The bottom line
Read your credit report carefully so you know it does not consist of errors that can cost you a huge amount down the line. Make sure you request a copy of your credit file from all bureaus, as you never know to whom your lender will turn.
In case of any errors, you should report them to your lender and get them off as soon as possible. If you see your credit report is not so impressive, work on improving your credit rating. Though you can quickly get the nod for a loan with a bad credit rating, you should still emphasise having a good credit file.