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Credit history or credit report is, in many countries, a record of an individual's or a company's past borrowing and repaying, including information about late payments and bankruptcy. The term "credit reputation" can either be used synonymous to credit history or to credit score. Notice of closure stuck on the door of a computer store the day after its parent company, Granville Technology Group Ltd, declared bankruptcy (strictly, put into administration - see text) in the UK. Bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their...
In the United States, a credit score is a numerical expression based on a statistical analysis of a persons credit files, to represent the creditworthiness of that person, which is the likelihood that the person will pay his or her debts. ...
When a customer fills out an application for credit from a bank, store or credit card company, his or her information is forwarded to a credit bureau, along with constant updates on the status of his or her credit accounts, address, or any other changes made since the last time he or she applied for any credit. “Banker†redirects here. ...
This article or section does not cite its references or sources. ...
This information is used by lenders such as credit card companies to determine an individual's or entity's credit worthiness; that is, determining an individual's or entity's means and willingness to repay an indebtedness. This helps determine whether to extend credit, and on what terms. With the adoption of risk-based pricing on almost all lending in the financial services industry, this report has become even more important since it is usually the sole element used to choose the annual percentage rate (APR). Credit cards A credit card is a system of payment named after the small plastic card issued to users of the system. ...
Credit risk or credit worthiness is the risk of loss due to a counterparty defaulting on a contract, or more generally the risk of loss due to some credit event. Traditionally this applied to bonds where debt holders were concerned that the counterparty to whom theyve made a loan...
Risk-based pricing is the practice in the financial services industry to charge different interest rates on the same loan to different people, depending on their credit score and other factors which make it seem like they are more likely to not pay back the loan. ...
Financial services is a term used to refer to the services provided by the finance industry. ...
Annual Percentage Rate (APR) is an expression of the effective interest rate that will be paid on a loan, taking into account one-time fees and standardizing the way the rate is expressed. ...
How credit rating is determined
Credit ratings are determined differently in each country, but the factors are similar, and may include: - Payment record: A record of bills being overdue will lower the credit rating.
- Control of debt: Lenders want to see that borrowers are not living beyond their means. Experts estimate that non-mortgage credit payments each month should not exceed more than 15 percent of the borrower's after tax income.
- 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.
- Re-Aging - Through re-aging, a credit history is re-written and you are given a fresh start on that particular account. This can dramatically improve the credit score. In 2000 the Federal Financial Institutions Examination Council (FFIEC) clarified guidelines on re-aging accounts for delinquent borrowers. [1] (PDF)
- Credit cards that 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 will not improve your score. The credit rating formula looks at the difference between the amount of credit a person has and the amount being used, so closing one or more accounts will reduce your total available credit. This in turn lowers the percentage of available credit, and the credit score will drop. The credit formula also factors in the length of time credit accounts have been open, so closing an account with several years of history is another avoidable credit mistake.
- Credit inquiries - An inquiry is a notation on a credit history file. There are two kinds of notations:
- "Soft" Credit Pulls:
- A credit bureau may sell a person's contact information to an advertiser purchasing a list of people with similar characteristics, like homeowners with excellent credit.
- A creditor can check a person's credit periodically.
- A credit counseling agency, with the client's permission, can obtain a client's credit report with no adverse action.
- "Hard" Credit Pulls: Hard credit inquiries are made by lenders. Lenders, when granted a permissible purpose by a borrower for the purposes of extending his credit, can check his credit history. Hard inquiries from lenders directly affect the borrower's credit score. Keeping credit inquiries to a minimum can help a person's credit rating. A lender may perceive many inquiries on a person's report as a signal that the person is looking for loans and will possibly consider that person a poor credit risk.
The Federal Financial Institutions Examination Council, or FFIEC, is a formal interagency body of the United States government empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation...
Generally speaking, advertising is the paid promotion of goods, services, companies and ideas by an identified sponsor. ...
A creditor is a party (e. ...
Credit counseling (known in the United Kingdom as debt counselling) is a process offering education to consumers about how to avoid incurring debts that cannot be repaid. ...
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A loan is a type of debt. ...
Understanding credit reports and scores In the United States, once every 12 months, each person is entitled to one free credit report from each of the three nationwide consumer credit reporting companies: Equifax, Experian and TransUnion. The three companies provide this free report jointly, through a website which asks for a social security number and other identifying information and then walks the user through the three companies' systems, so that the three free reports may be printed out. The site is http://www.annualcreditreport.com, easily confused with many for-profit companies that try to get business by masquerading as this mandated-by-law service. Equifax, Inc. ...
Experian is a global information solutions company, with operations in over 30 countries around the world, including the USA, UK, most European countries, Argentina, Brazil, South Africa, China, Japan and Australia. ...
TransUnion (full name Trans Union LLC) is a consumer credit reporting agency, considered one of the big three agencies in the United States. ...
The Government of Canada offers a free publication called Understanding Your Credit Report and Credit Score[2]. This publication provides sample credit report and credit score documents 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 check 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 of Canada. Paper copies can also be ordered at no charge for residents of Canada. The Financial Consumer Agency of Canada (FCAC) is an agency of the Government of Canada. ...
International issues Credit history is typically local to one country. Even within the same credit card network information is not shared for different countries. For example, a person who has been using Visa credit cards issued by banks in China or Canada for many years who moves to the United States and immediately applies for a Visa will not be approved because of lack of credit history. However, bringing in evidences of good credit history from the previous country of residence will greatly help. Examples of such evidences are utility bills or credit card statements for the past couple of years.
See also Adverse credit history, also called sub-prime credit history, non-status credit history, impaired credit history, poor credit history, and bad credit history, is a negative credit rating. ...
Credit cards A credit card is a system of payment named after the small plastic card issued to users of the system. ...
A credit rating agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations. ...
A Credit reference agency (Credit reporting agency in the USA) is an organisation that collects and collates personal financial data on individuals, from financial institutions with which they have a relationship. ...
In the United States, a credit score is a numerical expression based on a statistical analysis of a persons credit files, to represent the creditworthiness of that person, which is the likelihood that the person will pay his or her debts. ...
The Fair Credit Reporting Act (FCRA) is an American federal law (codified at 15 U.S.C. § 1681 et seq. ...
Identity taker is a term first appearing in U.S. literature in the 1990s, leading to the drafting of the Identity Theft and Assumption Deterrence Act. ...
Under the Fair and Accurate Credit Transactions Act of 2003 (FACT Act or FACTA), (Public Law 108-159) which was passed by Congress on December 4, of 2003 as an amendment to the Fair Credit Reporting Act, consumers can request and obtain a free credit report once every twelve months...
A seasoned trade line is a method of allowing strangers with bad credit to become authorized users on a credit card account of someone with good credit, for a fee. ...
External Links - AnnualCreditReport.com, The US Government mandated by law one free credit report per year for each agency
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