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In many countries, Credit report or credit history is a term given to the record of a company’s or a person’s information regarding previous borrowing, repaying, late payments and/or bankruptcy. The other terms used for this term are credit score, credit history and credit reputation. In a country (for e.g. United States), whenever a customer files an application for credit from a credit card company, store or a bank, his/her information is given to the credit bureau. This bureau matches the user’s (person applying for credit) general information details (name, address and any other identification info) with the information that has been retained by the credit bureau in its previous files. This is the reason why lenders, creditors and other people should provide correct information to credit bureaus. This information is then use by credit card companies, banks and other lenders to determine whether an individual can repay a debt or not (also called credit worthiness). The worthiness is specified by how timely (most preferably on monthly basis) the previous payments have been repaid. A lot of debates occur to discuss whether the information in the consumer reports is accurate or not. But, the only researched studies have stated that the data in the consumer reports is accurate. The studies included samples with size large enough to be considered valid. Even the credit bureaus conduct researches regarding the accuracy of reports. Approximately 50 million reports have been studies to state that the information in the credit reports is accurate. And the studies regarding consumer disputes showed that approximately two percent of the reports had deleted data (due to unknown errors). The credit bureaus have 30 days to verify the report if and when the consumer disputes any information in the report. More than seventy percent of the user disputes were resolved in less than two weeks and the user(s) were notified of the resolutions. It is seen that approximately ninety-five percent of user’s who had disputes were satisfied with the resolutions. Income is another factor which determines that whether a lender or bank can (or will) provide the consumer with the loan or credit. Consumers with higher income can get access to more credit. But, creditors and lenders take the decisions regarding the credit based on the willingness or worthiness (as indicated by previous payment history in the credit report) of the user and his/her ability (income) to repay the dept. These factors also help the lenders in determining the terms and whether they should extend the credit. Due to the adoption of risk based pricing on all the lending matters in financial services (credit cards or banks), the importance of the credit report has increased a lot. These reports are the sole elements which are used to decide the grace period, APR (Annual Percentage Rate) and other obligation in the contract of the loan or credit cards. Credit reports help both the lenders and the consumers in setting up helpful contractual obligations for giving (and getting) the loan. For more information on free credit report or credit reports, visit free-credit-reports.com
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