Credit Reports

What is a credit report?
In the first tutorial, we discussed how to order a credit report.  Hopefully, by now you've obtained a copy of your report from at least one or, better yet, all three major credit bureaus, and had a chance to look at your credit history. This segment will spend a little more time on why these reports are important and how they are used.

What is included in a credit report?
These reports contain personal information including your name, social security number, current and previous addresses, telephone number, birth date, current and previous employers; the amount and type of credit that has been extended to you and how you have repaid it; creditors and other parties who have requested your credit report; and public record information.

Public record items

A tax lien is a claim against property, or assets, filed by the taxing authority for unpaid taxes. For example, if someone did not pay their property taxes, the state could make a claim against their home.

A judgment is a court order placing a lien on a debtor's property as security owed to a creditor. For example, if someone stopped paying their property taxes, the county could send them notices of non-payment and eventually go to court to get a judgment lien. The judgment lien allows the county to claim proceeds from the sale of the house to cover taxes owed.

A collection account is a past due account that has been referred to a specialist to collect part or all of the debt. If someone does not pay a loan, for example, the bank may hire a collection agency to collect the debt.

Bankruptcy is a legal preceding that can legally release a person from repaying debts. There are two different types of bankruptcy--Chapter 7 and Chapter 13. In Chapter 7 bankruptcy claims, the individual gives up all nonexempt property and keeps all exempt property, which is property determined by the state to be necessary for the support of the debtor and his or her dependents.

In Chapter 13 bankruptcy, the debtor keeps all of his or her property and makes regular payments on the debts, even after filing for bankruptcy. To qualify for Chapter 13, you must have a regular income.

Filing for bankruptcy must be considered carefully with the understanding that it will have a negative impact on your credit. Depending on the type of bankruptcy for which you file, it will remain on your credit history for 7 to 10 years and make it hard for you to get credit in the future.

What isn't in a credit report?
Credit reports do not include information about checking and savings accounts, income, medical history, purchases made with cash or check, business account information, race, gender, religion or driving record.

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