A credit report is a must for all and this forms the basis for a person`s credit or money borrowing capacities and eligibilities. This report explains everything in detail about the various types of credit or loans taken so far, his repayment structure, his interest payments etc and most importantly his prompt responses and payments towards the settlement of the credit taken. This forms the basis for his eligibility for the loans in future and this is what is explained in detailed, elaborate terms in the credit report.
How do credit reports work?
A credit report is basically issued by the credit rating agencies who agree to help or rate a person and his eligibility for a loan to the lender. Whenever there is a credit or a loan request from a borrower, the lender immediately falls back on what his credit report says and cross-checks the same with the credit bureaus to get a better understanding.
When a person applies for a credit, the lender would request for a copy of the credit report from the person. Then he evaluates the scores and other financial information like income, assets etc and based on this arrives at the creditworthiness of the person and the rate of interest to be charged to him for the loan amount taken. One very important thing when comes to this interest rates is that a good credit score would help a borrower get a loan at lower interest rates. Yes, the higher and better scores, the lower would be the interest rate and the monthly interest payment. So a credit report need not necessarily be an important document at the time of loans alone for they can help you at any emergency times with such excellent scores. You might not require a credit at all in the immediate future but emergencies do not knock at your doors before their befall. So always be ready with this report for they might help you at such times. This report is important for all and any types of loans.
Things you must know about credit scores
There are many important things a person is required to know about the credit reports and the credit scores and here is a complete and full detailing of all these. This can be used as a handbook in understanding a person and his credit borrowing patterns. This handbook is important for both the borrowers and the lenders.
• Before any type of loan sanctioning the lenders look into this credit report to take an understanding about how the borrower is and what his repaying patterns are. This report explains everything crystal clear and talks at length about the credits taken, the loans settled, the loans in use, the repayment and the timely repayment of the borrower, his capacity to settle the loan amount completely etc… So this single report becomes the primary and in fact, the sole document that talks everything about the borrower and this is the reason it is considered the most important one while going for a loan.
• This is considered important and essential because it forms the basis on which the lenders take the final decision of whether or not to lend money to the borrower. It would indicate the lender’s capabilities in repaying the amount and is an assurance to the lender that his money would come back on time without any barricade or troubles.
• A credit report does not speak just about the credit scores but there is four important information that can be derived from this sheet. Personal information that talks about the name of the borrower, his residential address, social security number, date of birth, spouse name etc; account information like the bank account, type of account, date of account opening, credit limit offered etc.; information from public records like tax payments, defaulted repayment information etc and a detail about the number of inquiries made into the person`s credit report.
• It is important to have a detailed study of this credit reports in consultation with the borrower because there are possibilities for this report to go wrong at times. Sometimes the information might not be updated and hence it is important to speak to the lenders, the borrowers to cross check the information provided to get a clarity.