What is really on a credit report?
Every applicant in search of a new credit card understands the process. A lender will require the borrower to fill out an application and, with the personal information provided on the form, will then run the applicant’s credit report to judge if he or she is creditworthy. Though this is a common occurrence, many borrowers are unsure of what actual information the lender may access. This article lists the information lenders will find on a prospective borrower’s credit report.
Primarily, a credit report includes the applicant’s personal information such as employment, place of residence (present and past), date of birth, driver’s license number, and full legal name. It also includes information about credit applications, listing how many times the borrower has applied for credit, the amount requested, and the type of loan sought; such as home loan, car loan, credit card, etc.
As a credit report lists the number of times an applicant has applied for credit, many loan and credit advisers warn consumers to not apply for too many loans, because this takes a toll on an applicant’s credit. When lenders see an applicant who’s applied for several credit cards or other loans over the past month or two, they get the impression of a person who’s facing financial difficulty and is desperate for credit, making them less likely to grant that application.
Most importantly, a credit report depicts an applicant’s credit defaults, which is a payment that’s overdue 60 or more days. Defaults are the last thing a prospective lender wants to see. If a borrower has one default, they can expect to receive a limited line and pay a higher interest rate. But if an applicant has more than one default, the chances of being declined for a credit card increase substantially.
A credit report also includes loan defaults that have been paid. This is a good sign to lenders, as it shows the borrower did repay the loan. Borrowers can attempt to explain why it took an extended time, such as personal issues, being in-between jobs — but the bottom line is, applicants should express their own responsibility.
Furthermore, credit reports include serious credit infringements, when lenders essentially write off the debt as uncollectible due to unsuccessful attempts to collect from the borrower. A credit report also includes bankruptcies and judgment debts pertinent to the lender.
Borrowers should also note what a credit report does not include. It doesn’t include the applicant’s criminal history, political affiliations, social or religious beliefs, medical record, sexual preferences, race or ethnicity. It is illegal for a lender to approve or decline a loan, based on any of these criteria.
Finally, borrowers may receive a free copy of their credit report from Australia’s two agencies, Veda Advantage and Dun & Bradstreet. Borrowers living in Tasmania may receive a copy from the Tasmanian Collection Service.