wtorek, 2 października 2012

The importance of consumer credit reports

A lot of people are completely unaware of the importance of consumer credit reports. The current condition of the economy in countries all over the world has prompted many people as well as institutions like banks to pay more attention to the intricate details which are usually found in consumer credit reports. People are now taking extra car to ensure that no negative comment is found in their credit report. 

The job of creating these credit reports lies with the credit reporting agency. Now these reports are also being made available online so that they can be accessed by banks and financial institutions which are involved in the process of providing credit. These consumer credit reports will also be required when regular everyday purchases are being made. The examination of these credit reports is a mandatory procedure when large purchase transactions like the purchase of a house or a car are being made. 

Every person should be completely aware of the exact contents of their credit report. 

They should take extra efforts to ensure that derogatory comments regarding their credit status or financial status are not found in this credit report. Credit reports are prepared for people who have crossed the age of eighteen years. A pie chart is used during the process of creating the credit report in order to compute the actual credit score of the person. This pie chart will be divided into many different portions which will equal 100%. 

The largest and the most important portion of this pie chart will consist of all the expenses which have been incurred by the person. These expenses will comprise 35% of the pie chart. The next largest portion of the pie chart consists of all the loans and debts which need to be repaid and this will comprise the next 30% of the pie chart. The next portion of the pie chart will state the time period during which the bank account of the person has been showing a positive balance. This portion will comprise the next 15% of the pie chart. The remaining 20% of the pie chart will contain details of any loans or any other kind of credit which has been taken in the recent past apart from the kind of loan which has been taken. 

Apart from knowing the contents of the credit report, it is also equally important for people to know the manner in which this credit report has been created. All the criteria used in allotting credit scores should be understood carefully in order to ensure that an optimum credit score is maintained at all times. The past financial track record of the person plays a very important role in determining the credit score of an individual.Checking your credit score plays a crucial role for your interest rates.

The credit scoring pattern and system is different for every credit rating agency. This credit score will reflect the financial position of the person. Statistics and analysis will play a very important role in computing the credit score. There are many other factors which can affect the credit score like the age and occupation of the person.More at Experian.