In the world of financial market, the credit reporting is an important aspect of business dealings. It discloses the financial profile of a person who wants to borrow money from any money lending institution.
It is just like the progress report of your old school. Before giving you admission, the new school Principal carefully observed your progress or digresses in different subjects. And when he was satisfied with your merits, he offered you admission. In the same way, financial institutions carefully verify your credit report and decide whether loan to be sanctioned or not. They consider three aspects—your credibility, loan amount and risk associated with it. The credit report contains the financial status and financial transactions. You might have borrowed money from banks. If so, it’s your duty to repay the loan. The credit report will also contain your sincere efforts in paying interests back. It will cover up your financial liabilities, your earning and expenditure. In a word, it will cover all areas of your financial transactions and liabilities including your goodwill.
There are so many credit bureaus in the market. But all are not equally reliable. They are like intelligence bureaus having your financial profile with them. The credit bureaus are many, yet they do not share information with them. Therefore, your credit report is different with different bureaus. The credit bureaus provide money lenders with different reports. As a result, they are not always relied upon by the lenders. It seems that there is no coordination between different sub systems of the same system. There is no transparency and cooperation between the credit bureaus and the money lenders. The credit report being different evokes controversy. The credit report will make you surprise when you come to know that important areas of financial transactions are not being covered and reported. It is expected by all that the profile of mortgage loan payment should be the part of credit report. It may not be so. Let’s have a look what they should contain. Surprisingly, you will find important items omitted. You must know what it should contain. The credit report must include what essential financial transactions are. Your loans, bank accounts, yearly income and expenditure, your insurance, your movable and immovable property, your financial liability along with your credibility must figure in your report.
The credit reports prepared by different bureaus look totally different. That is why money lenders do not subscribe to such reports, and if subscribed, do not pay much importance.
Let’s venture to the answer of a particular question. Who does report? The reality will let you know that reporters are the credit card companies, financial and loan companies, collection agencies and major retailers. Reporters are different, such are the reports. The reports can go to any extent including your mortgage liens, tax liens, a bankruptcy, judgments, dependents, gas bill, electricity bill etc. It’s a long list, sometimes up to fifteen pages.
It is also important for you to know that the creditors are not under any compulsion to provide credit bureaus with information. Different countries have different laws on accessing to information. In the US the Federal law FCRA (Fair Credit Reporting Act) regulates the credit reporting agencies. This Act ensures information to be accurate. In case of providing false and fabricated information, the Act has the provision to look into the veracity of information to settle the customer’s disputes. If necessary, please collect the credit report from more than one company, and make a comparative study of all the three reports. It is important for the financial institutions to review your credit report and then to decide whether the loan demanded is to be approved or not.
You should never forget that negative remarks on a credit report last longer than the positive remarks. Any negative information that appears on credit report can remain for up to seven years. Such negative remarks include late payment, bankruptcy, charge off notation, lien or judgment, etc. Bankruptcy can remain on your credit report for up to 10 years. The Fair Credit Reporting Act has made it clear how long negative remarks will remain in the credit report. It is after all punishment lowering your dignity down. The good thing is that such remarks will never remain in the credit report forever. There is end to your punishment. The different provisions of law have accommodated different exceptions in different circumstances. The information about criminal convictions is reported without any time limitation.