Developing a clear understanding of what credit is and how day-to-day activities have an impact on your credit report is important if you want to make your credit information positive and accurate. Alongside the benefits of lower interest rates and greater loans, applicants who take an active role with their credit have a clear advantage within the rental industry. By making sure you know the credit report basics, you can not only answer any unforeseen credit report questions by curious applicants, but you can learn how you can reap the full benefits of a positive credit score.
The following information has been taken from the National Consumer Reporting Association’s (NCRA) “Man on the Street” video series, which provides a basic understanding of what is and isn’t included on a credit report. Alongside credit experts, ApplyConnect®’s Caryn Bennett answered questions from everyday bystanders and volunteers. These interviews have been edited for clarity and are only a small part of the series.
“What is a Credit Report and Where does it Come From?”
Jackie Drziak, Vice President of Compliance and Business Development at Strategic Information Resources: “A credit report is a compilation (or very detailed storage) of credit accounts. It contains detailed information on loans, credit cards, mortgages, public records, and inquiries.”
Caryn Bennett, Compliance Manager at ApplyConnect®: “There’s a payment history; whether or not your accounts are paid on time (if it’s 30 to 60 days late).
“Your Credit Reports are Extremely Important.”
Jackie: “Credit reports are really very important. As we go through life and apply for new things, like a loan, apartment lease or mortgage, the person we’re working with goes to the credit report to get a one efficient resource of how we’ve paid our obligations off. So they know if we’re a good credit risk going forward.”
“A Credit Report is a Promise.”
Caryn: “When you fill out an application for a credit card or apartment, you’re making a promise to a creditor to pay back the debt. So the credit report is a history of whether those promises have been met in the past.
“What Types of Information are on my Credit Report and How did they Get There?”
Jackie: “Information on the credit report begins with our own personal data. Things like name, current and previous address, date of birth, and our social security number. In addition to our personal data, there’s a lot of detailed information about the credit accounts that we hold; things like the date opened, high credit, balance information and payment data. Accounts that are on the credit report will be things like credit cards, loans, mortgages, student loans…”
Caryn: “medical debt, tax liens, bankruptcies, civil judgements… all of that good stuff.”
“What’s Not on a Credit Report?”
Caryn: “Credit reports do not tell us whether we’ve been married, had children, our nationality or criminal data. Criminal data can be on specialty consumer reports, but it’s not on a standard credit report.”
“How Can I Improve my Credit Score?”
Peter Fitton, Product Manager at CreditXpert: “Improving credit takes time. It takes adjustments. Some people say it’s a bit like losing weight or recovering from an illness. It most cases if people get into credit problems, it occurred because they suffered a loss in income or their expenses had have gone up, and the debt that they had (which was previously affordable) becomes unaffordable. So if you’re in that situation, what you really need to do is reverse the process. Get more income and reduce expenses. You can sell off possessions, take on a second job, take on freelance work so that you have more income to pay off your debt.
One thing that can really help in that kind of a situation is to turn to a legitimate non-profit credit councilor who can advise you on your situation, and help create a plan to improve credit.”
Julie Wink, Executive Vice President of Data Facts Inc.: “I’d just be careful because there’s a big difference between credit counseling and credit education versus credit repair and debt settlement organizations. Keep in mind that a lot of those organizations are just trying to renegotiate your debt and how you pay the creditor. They don’t necessarily care about when it’s paid or how it’s reported.”
Intricacies of Credit Balances and Reports
Peter: “If you have money available to improve your credit, the most important thing is to get current on all payments first because the longer a late payment was, the less it affects the credit score. A close second to that is balance to limit ratio (the percentage) on credit cards. The higher you have debt on an individual credit card or overall, the more negatively it affects the score. By getting those percentages down, it improves your score pretty quickly.”
Whether you have good or bad credit, it’s important to stay on top of your credit information. This allows you to pre-plan before applying for your next life-changing move, ensuring you reap the benefits of a good credit score. Although everyone’s credit history and situation is different, the more dedicated you are to removing any debt and reporting any inaccurate information on your report, the safer and more positive your information becomes. Learn more about what’s included in ApplyConnect®’s full Experian® credit report.