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What Does a Consumer’s Credit Report Reveals?

By Faye Mergel
Published: Tuesday, May 14th, 2013

The credit score, also known as a FICO score, is used to determine the likelihood of a consumer to pay the bills or liabilities. The score ranges from a low of 300 points (highest risk) to the highest of 850 points (lowest risk) and is used to determine on more than 75% of all credit applications. To determine a FICO score, five critical factors are taken into consideration such as current level of indebtedness, previous credit performance, types of credit available, the duration for which credit has been in use, and pursuit of any new credit. However, what does a credit report reveals? Why it is important to have a good credit score?

The first segment of a credit score presents personal data of the consumer such as previous and current address, employment history, and social security number. This is important in identifying any inaccuracy or misrepresentation of information provided by the consumer. The next section comprises of credit report, providing a summary of the consumer’s credit history. This includes number of credit accounts held by the individual, type of accounts, number of accounts that are in good standing or past due, and the number of credit inquiries in the last 12 months. It is important to understand here that having more credit accounts does not necessarily mean having a better credit score.

The third section of a credit report highlights information about the accounts held by the consumer. This includes the name of the bank or financial institution, account number, type of account, date of opening, and status and balance of each account. A further breakdown of every account provides information about date of last activity, payment history, and contact information of credit issuer. A summary of negative credit history and past-due accounts is also provided in this section.

The next section of the credit score provides a glimpse of all credit inquiries in the consumer’s history. In the Collections section, details about any delinquent account are provided, with information about wage garnishments, lien, and other judgments against you in court. The last section addresses how to dispute the information provided on the credit report.

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