Loans have become a part of modern lifestyle. Instead of saving money and then spending it on your needs, people opt to go for a loan. Easy availability of the credit cards has also induced people to spend without any further thought. As more and more people take loans, banks and other institutions lending money have started using the credit report of the borrower. This report gives the detailed history of the applicant.
Credit report is the best way to decide your creditworthiness. It gives detailed information about your credit, residence and employment histories. When you fill out your personal details in your application, they form your personal details. Besides, information from banks, traders and other lenders is collated. It contains judgments, tax liens, bankruptcies and any other information on public record against you. Besides, the number of times your report has been requested either by a lender, service provider, landlord or employer within 2 years is also mentioned. All this information helps the lender to judge your repayment ability. It allows him to either consider or reject your loan application.
But what you do not know is that that this report should not be made accessible to anybody without your consent. Besides, the reporting agencies refuse to show credit report to you or look into credit disputes stating that they do not recognize you. They ask for proof of ID or utility bills. For military forces or people living abroad, it is very difficult or impossible to get credit reports.
Though credit reports help companies increase their profits, sometimes they can penalize honest consumers by providing erroneous reports. Problems like inaccurate reports, theft of identity and asking consumers to pay huge fees to take care of credit once the thieves knows your identity.
But taking simple precautions will help you. Once you get the report, go through it carefully. Get any errors corrected immediately. After you pay off your dues, tell the lender to inform the credit report agency to correct your record. Check any inconsistencies in the report e.g. if you have not opened any fresh account but is attributed to you, charges you did not incur or any dispute with the lender that is not your fault. Bring any inconsistency to the notice of the credit report agency immediately.