Credit Report Agencies – A Synopsis

Credit Report Agencies are firms that help the lender establish the creditworthiness of the prospective client. Most of the times, banks, financial lending institutions, credit card companies or departmental stores want to ascertain clients who are a good credit risk and those who are not. They use credit reports to determine who qualifies for the loans and at what rate of interest.

Credit reports contain detailed personal information about a client. This includes your residence record, place of employment, income status, court and arrest records, details of your utility payments and repayment of loans. This information gives the creditor clues about how you pay your bills, how you have handled credit in the past, whether you have had financial troubles and whether you have been to court due to financial problems.

Credit Report Agencies obtain data from banking records, utility companies and credit card companies. The record of the data pertaining to an individual is maintained by the credit report agency and handed over to any creditor who requests for it. The Credit Report Agency does not make any judgment regarding the creditworthiness of the individual. It is the creditor or lender that makes a decision as to whether you are a good credit risk or not.

If an individual applies for a credit card or a loan, the company will base its acceptance of the application on the personal credit report. If the credit report is positive and shows that you have been reliable with your credit activity in the past, your loan or credit card will be approved. If there have been late payments or if there is default in repayments of loan installments, this will affect your chances to obtain the loan.

An individual is entitled to get a copy of the credit report it has provided the lending agency. Since the file contains personal details, the individual has a right to know the exact information being passed on to the lending agency or Credit Card Company he is dealing with. The credit report may not provide positive information regarding your creditworthiness as its report may be based on very old facts that may not be relevant for the current period. If this is the case, the customer can try to improve the situation by providing current details that may have a positive outcome.

One can always make the effort to build a new creditworthiness by paying the bills on time, not using the entire available credit limit and monitoring the credit report for errors.