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Credit Report-the Tool to Know Your Customer

By Janet Lacey
Published: Monday, May 6th, 2013

Credit report is a tool to know details of an individual’s or a company’s past borrowings and repaying. The report is published by credit bureaus and that report also includes late payments or bankruptcy by the individual or the company. Hence, the report is very important to keep the economy stable.

How it works?

Albeit various countries have different rules, in most of the countries, a customer, who is willing to take loan, is asked to fill up an application form. The filled-up form forwarded to the credit bureau which get the details of the customer through that form. Credit bureau keeps it in record for future reference. This is the customer’s identity. Whenever the customer takes loan or pays the due amount to the banks, the credit record is updated accordingly.

All the information in the credit report determines the person’s credit worthiness. That means it determines whether the person can take the loan, if the individual paid due amount at right time or if it has ability to repay the debt.

In order to get huge loan, you have to earn accordingly. More you can earn, the more you will get loan. But, the interest rates and the credit reports vary inversely. The more your interest rate will be, the less your credit report score will be and vice versa. Actually, lenders want good track records; that is, whether the person makes its due payments regularly and maintaining good timing etc.

Hence, keeping good credit report is very important for all borrowers to get loan and also for its future loans.

Keeping Good Track Record:

If you want to keep your credit report score good, make sure that you are always get in touch of your credit record history.

The most important is payment of debt. You have to pay the due amount in time. In most of the cases, borrowers often missed the deadline to make payment, hence keeps its credit report bad.

Criticism:

There is too much skepticism about accuracy of the data in credit reports. Although the statistics shows that only two percent of the total credit reports are prone to error in the US, the widespread skepticism claims the whole credit reports is prone to error and some of the governments either banned or changed the law about credit reports.

However, the credit report exists in many countries more or less. So, borrowers have to keep the credit report record well in order to get good amount of loan.

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