Credit report – determines the face value of a customer

A credit report is a piece of information that contains the credit (borrowing) history. Lenders provide their information regarding a person’s credit history. This contains detail regarding how that individual has repaid the loan amount and other relevant information.

The term credit is derived from the Latin word ‘creditus’ which means to trust. The concept of credit has developed with this notion of trust. The lender lends money to the borrower with a signed contract that the latter will repay the money within a stipulated time as agreed before by both the parties.

The term credit has become a catchphrase these days. People now-a-days opt for credit every now and then. The prime mode of transaction these days are made via cards. Mostly credit cards. There are a few sites that provide the history of a customer’s credit background. Some of these sites are Experian, Equifax, Trans union.

Most of the things today starting from cable and electricity bills to personal loans, job applications and others, people gauge the credit rating. Hence it is always a wise thing to maintain good credit history. One should ensure that his spending are under control, one should try to avoid unnecessary debts, make on time payments and other things that makes his credit history a reliable one.

One should always try to remain clean in his credit transactions. The cost of everything has risen steeply over the last few years. People might need to go for a credit in certain emergency situations, such as in cases of a crisis or a health condition. The sudden requirement of money can then be sufficed by credit providing organizations. If the credit report of a person is bad, credit institutions will refrain from providing loans.

Once a report is damaged, it bears that information for the next seven to ten years. This depends on the amount of debt that has been taken by the borrower.

A report is not made until it is asked for, either by a lender or by the borrower. On demanding the report it is compiled by the reporting agency. This is then given to the one opting for it. This information is collected from several lenders, shopkeepers or others with whom we have dealt in credits. All this information are tailored together to make a complete report. That reflects the credit history of a customer or lender. The information includes several things like the way the borrowers use their accounts.

The files of millions of borrowers are maintained by the agencies. This information is bought by lenders who would be making their credit decisions. A credit history comprises a lot of information, it includes whether the customer has duly paid his bills, the time length of his accounts, the type of credit he uses and also whether he is looking for new credit providing sources. This provides a lender with a holistic knowledge about the potential borrower.

The reports are generally classified into four parts, these are

• Credit history
• Inquiries
• Public records
• Personal identification information

Therefore a borrower or a customer should be careful while dealing in credit transactions. A petty mistake or ignorance can have a negative imprint on the minds of the lenders.

Author bio – Jimy Jones has worked with credit providing institutions for a long time. He has provided his knowledge regarding credit report in this article. For more information Please visit creditreport.org