Banks – Banking n Finance » Credit History

Credit history or credit report is, in many countries, a record of an individual or previous loans and the repayment of the company, including information about late payments and bankruptcy. The term “credit reputation” can be used synonymous to credit history or credit score.

In the U.S., when a customer fills out an application for credit from a bank, store or credit card company, your information is sent to a credit bureau. The credit bureau matches the name, address and other identifying information of the credit applicant with information retained by the Bureau at its files.That ‘s why it is very important for creditors, lenders and others to provide accurate data to credit bureaus.

This information is used by lenders such as credit card companies to determine the creditworthiness of an individual, ie the determination of the will of a person to repay a debt. The willingness to pay a debt is indicated by the timely payment of the past have done to other lenders. Lenders like to see the debt obligations of consumers pay on a monthly basis.

There has been much discussion about the accuracy of the information in consumer reports. However, the only scientifically researched studies that include sample sizes large enough to be valid have concluded that, in general the data in credit reports is accurate. The credit bureaus about your own study of 52 million credit reports to highlight the data in the reports is very accurate. The Consumers’ Association Industry Data testified before Congress that less than two percent of the reports resulted in a consumer dispute had data deleted because it was a mistake.

If a consumer disputes any information on a credit report, the credit bureau has 30 days to verify the data. Over 70 percent of these consumer disputes are resolved within 14 days and then the consumer is notified of the resolution. The Federal Trade Commission that a major credit bureau notes 95 percent of those who dispute an item seem satified with the result.

The other factor in determining whether a lender will provide a consumer credit or a loan depends on your income. The higher the income, all other things being equal, the more credit the consumer can access. However, lenders make credit granting decisions based on both ability to repay a debt (income) and willingness (the credit report) as indicated in the payment history.

These factors help lenders determine whether to extend credit, and under what conditions. With the adoption of price risk in the loan based predominantly in the financial services sector, this report has become even more important, as is often the only element used to choose the annual percentage rate (APR), period Grace and other contractual obligations of credit card or loan.

Contents
1 How credit rating is determined
2 The acquisition and understanding credit reports and scores
Credit 3 History of Immigrants
4 adverse credit
5 Consequences
6 More than a credit per person
7 See also
8 References
 
Do you determine the credit rating
Credit ratings are determined differently in each country, but the factors are similar, and may include:

Payment history – a record of late payments, in general, being more than 30 days, will lower the credit rating.
Control of debt – Lenders want to see that borrowers are not living beyond their means. Experts estimate that non-payment of mortgage credit each month should not exceed more than 15 percent of after-tax income borrowers. [Edit]
Signs of responsibility and stability – Lenders perceive things such as longevity in the borrower’s home and job (at least two years) as signs of stability. [Edit]
Re-Aging – Through re-aging, you change the date of the last action on the account. This can dramatically alter the credit score. In 2000, the Federal Financial Institutions Examination Council (FFEIC) clarified guidelines on re-aging accounts for delinquent borrowers. (PDF)
Use of lenders increased risk attributable to accounts with balances close to their limits.
Credit applications – New research shows every time a company requests certain information from credit file of a consumer. There are several types of questions that may or may not affect your credit score. Investigations have no effect on the creditworthiness of a customer (also known as “soft inquiries”) are:
Screening of research into a credit bureau may sell contact information of a person to an institution that issues credit cards, loans and insurance based on certain criteria that the lender has established.
A creditor also checks customer credit files regularly.
A credit counseling agency, with permission from the client the possibility of obtaining a credit report from a client without an adverse action.

A consumer can check your own credit report without affecting solvency.
Research that has an effect on the creditworthiness of a customer (also known as “hard inquiries”) are made by lenders when consumers are seeking credit or loan in connection with a permissible purpose. Lenders, when granted a purpose permitted as defined by the Fair Credit Reporting Act, can “pull” a file of consumers for the purpose of extending credit to a consumer. Research hard lenders directly to the borrower’s credit score. Keeping credit inquiries to a minimum credit rating can help a person. A lender may perceive many questions in a short period on the report of a person as a sign that the person is in financial difficulties, and may consider that person a poor credit risk.

Credit cards are not used – Although it is believed that having too many credit cards can have an adverse effect on a credit score, closing these lines of credit do not necessarily improve your score. Many risk models consider the difference between the amount of credit a person has and the amount used: closure of one or more accounts will reduce the total credit available, the lower the percentage of available credit and possibly lower your score credit. Risk models also consider the age factor: the closing of an account with several years of history that is in good position most likely to negatively affect your score.

The acquisition and understanding credit reports and scores
There are many companies aim to make money by providing services to consumers to check their credit reports and confirm the information in them. These companies advertise heavily. However, the U.S. Law requires that the three major credit bureaus (Experian, Equifax and TransUnion) to produce a copy of credit reports to any consumer who requests it once a year. The web site legally required to request this free service and is https: / / www.annualcreditreport.com. Note that even carrying out the steps to acquire these reports, users will see promotions for additional credit checking services that cost money. Following closely the process and reducing payment services allow users to obtain their free, legally mandated reports. Also note that the free reports will not tell a real number credit rating is not its goal. Rather, they provide a list of accounts that users can confirm that there is misinformation on the reports.

The Government of Canada offers a free publication called Understanding Your credit report and credit score. This publication provides credit report and score documents show credit with explanations of the notations and codes that are used. It also contains general information on how to build or improve credit history, and how to search for signs that identity theft has occurred. The publication is available online at http://www.fcac.gc.ca, the site of the Financial Consumer Agency Canada. Paper copies can also be ordered at no cost to residents of Canada.

Credit history of immigrants
Credit history usually applies to a single country. Even within the same credit card network, the information is not shared between different countries. For example, if a person has been living in Canada for many years and then moved to the United States, when applying for credit cards or a mortgage in the U.S., which would usually not be approved because lack of credit history, even if they had excellent credit in their country of origin and, although he had a very high salary in their country of origin.

An immigrant must establish a credit history from scratch in the new country. Therefore, it is often very difficult for immigrants to obtain credit cards and mortgages until after working in the new country with a stable income for years.

Some credit card companies (American Express Fe) can transfer credit cards from one county to another and thus help initiate a credit history.

Adverse credit
Adverse credit history, also called sub-prime credit history, credit history, status, impaired credit history, poor credit history bad credit history, credit rating is negative.

A negative credit rating is often considered undesirable to lenders and other extenders of credit for the purpose of loaning money or capital.

In the U.S., credit history is compiled by consumer reporting agencies or credit bureaus. The data submitted to these bodies are primarily provided to them creditors and includes detailed records of a person’s relationship with the lender. It has detailed information, including payment history, credit limits, balances high and low, and the aggressive actions taken to recover overdue debts, are all reported regularly (usually monthly). This information is reviewed by a lender to determine whether approval of a loan and on what terms.

As credit became more popular, it became more difficult for lenders to assess and approve credit card applications and loans in a timely and efficient. To address this issue, credit scoring was adopted. [Citation needed] One advantage of the score was made credit available to more consumers and lower costs.

Credit scoring is the process of using a proprietary mathematical algorithm to create a numerical value that describes a solvency of applicants in general. Results, often based on numbers (between 300-850 for consumers in the United States), statistically analyze a credit history compared to other debtors, and measuring the magnitude of financial risk. Since lending money to a person or company is a risk, credit rating provides a standardized way for lenders to assess that risk rapidly and “without prejudice”. [Citation needed] All credit bureaus also offer credit rating as a complementary service.

Credit scores assess the likelihood that a borrower pays a loan or credit obligation. The higher the score, the better the credit history and the greater the likelihood that the loan will be paid on time. When creditors report an excessive number of late payments, or trouble with collecting payments, your score suffers. Similarly, when informed of the adverse judgments and collection agency activity, the score decreases even more. Repeated delinquencies or public record entries can lower your score and trigger what is called a negative credit rating or adverse credit history.

Your credit score is a number calculated from such factors as the outstanding loan against the amount due, the past their ability to pay all your bills on time, how long you’ve had credit, types of credit and number research. The three main reporting agencies from consumers, Equifax, Experian and TransUnion sell all credit scores to lenders. Fair Isaac is one of the main developers of the credit ratings used by these reporting agencies. The full form in which your FICO score is calcualted is complex. One factor in your FICO score is credit checks on your credit history. When a lender requests a credit score can cause a small reduction in the credit score. This is because, as stated above, a series of consultations over a relatively short period of time may indicate that the consumer is in financial difficulty.

Consequences
The information contained in a credit report is sold by credit agencies to organizations that are considering offering credit to individuals or companies. Also available to other entities for the purpose of “acceptable”, as defined by the Fair Credit Reporting Act The consequence of a negative credit rating is typically a reduction in the likelihood that a lender will approve an application for credit on favorable terms in any case. Interest rates on loans are significantly affected by credit history, the higher the credit score, the lower the interest, while the lower credit rating, the greater the interest. The increased interest is used to compensate for higher default rate in the low credit rating group of individuals.

In the United States insurance, housing and employment be denied on the basis of a negative credit rating.

Note that is not the credit reporting agencies that decide whether a credit history is “adverse”. It is the individual lender or creditor which makes that decision, each lender has its own policy on what scores fall in its guidelines. The specific skills that fall within the guidelines of a lender more often not disclosed to the applicant because of competitive reasons. In the U.S., the creditor is obliged to give reasons for denying credit to an applicant immediately and must also provide the name and address of the credit bureau who provided the data that was used to make the decision.

More than one person credit history
In some countries, people may have more of a credit history. For example, in Canada, although most Canadians are unaware of this, anyone applying for credit before obtaining a Social Security number has two separate credit histories, one with sin and a sin. This is because the credit reporting structure in Canada. This can result in two parallel stories, completely independent, and often leads to inconsistencies (although typically the person in question will never notice the inconsistencies), because when a lender requests a credit report someone to sin, which the lender gets is different from what it would have earned if he asked the report without providing the SIN. This is because, contrary to popular belief, when someone receives new sin, for any reason, the two credit files are never merged unless the person specifically requested. As a result, a record with SIN zeroed out is kept separate from records with sin. Note this happens without the person even knowing it.