Consumer Credit Report Issues

By: EconomyWatch   Date: 27 October 2010

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A consumer credit report contains the factual details of the credit payment history of a particular individual. This is a very important document. With the help of a consumer credit report, the lenders or creditors can have the access to the necessary information for the purpose of determining the creditworthiness of the debtor.

Usually, a consumer credit report carries details about the individual identification of the debtor and a credit history in a summarized form. Through a consumer credit report, the creditors are able to get an idea regarding the frequency of loan payments done by a debtor. This will assist the creditors ascertain whether it is safe to lend to such a borrower or not, in other words, whether lending to the borrower carries high credit risk or low credit risk.

The information regarding credit payments by consumers are generally reported by the creditors to the credit reporting agencies, which are also known as credit bureaus. The credit reporting agencies or CRAs or credit bureaus gather crucial data from the businessmen, creditors and landowners for preparing the consumer credit reports.

In the United States, the three most important credit bureaus are the following:

  • Trans Union
  • Equifax
  • Experian

    Consumer credit reporting agencies in the United States are regulated by the Fair Credit Reporting Act or FCRA. In the year 2003, an amendment was made to the Fair Credit Reporting Act according to the Fair and Accurate Credit Transactions Act or FACTA, which facilitated the receipt of one free credit report by the consumers every year.

    In the United States, the creditworthiness of a particular debtor is assessed with the help of a three digit credit score supplied by independent financial services providers, for example the FICO credit score. This credit score has been formulated by Fair Isaac Corporation.

    The credit score of an individual side by side with his credit report impacts his borrowing capacity from financial entities like banks, non-banking financial corporations (NBFCs) and other sources. The elements which might affect the credit rating of a person include the following:

  • Interest rate
  • Capacity to repay a loan
  • Amount of credit utilized
  • Amount of loan
  • Approach towards expenditure
  • Saving approach

    The consumer credit report is regarded as a confidential document about the credit history of a particular individual. The creditors can obtain a consumer credit report against a stipulated amount of fee and also place the orders online.

    Issues Related to Consumer Credit Report

    It is necessary for an individual to authenticate his consumer credit report in order to clarify the following details:

1) History of Payments

By going through the history of payments and nonpayments, the creditors will be able to make an idea about his financial condition. In case there is some adjustment with the creditors, that should also be mentioned in the consumer credit report.

2) Rectification of Discrepancies

The debtor should instantly let the credit bureau know if there is any discrepancy in his consumer credit report. These discrepancies may be associated with delay in payments, payments not collected or credited, or erroneous data.

3) Inquiries

The inquiries are placed by the creditors on the consumer credit report of a particular individual and these inquiries are frequently considered as negative. Excessive inquiries can hinder a debtor to receive additional debt from the creditors.

4) Credit Fraud

Credit fraud refers to the stealing of any account number or a credit card of an individual and the purpose behind this is to carry out unauthorized usages.

5) Identity Theft

Identity theft denotes the offense of collecting the financial and personal details of another individual exclusively for the intention of acquiring the identity or name of that individual for carrying out purchases, deals, opening new accounts, or directing credit card statements to fictitious addresses. Identity theft can throw a challenge to the capacity of receiving additional credit by a debtor.

Information Provided by a Consumer Credit Report

The information provided by a consumer credit report can be categorized into the following types:

1) Credit information
  • Name of the credit card issuers
  • Name of the retailing companies
  • Names of banks
  • Other creditors
    2) Personal Identification Information
  • Name of the person
  • Social security number (SSN) of the person
  • Present and earlier addresses of the person
  • Date of birth of the person
  • Name of the spouse, if the person is married
  • Present and past employers of the person
    3) Public Record Information
  • Tax lien
  • Bankruptcies
  • Monetary judgments

     


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