Credit Report

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What is a credit report?

A credit report is a an electronic file based on your previous credit history and current credit history. Lenders can then access these credit reports to get a better understanding of whether your a qualified or risky candidate for credit.
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Value of Credit Report

Almost everyone has to borrow money at one time or another. Whether you are borrowing to finance a business, or to buy a house, car or some other major purchase, good credit report makes a vital difference as to whether or not the loan is going to be granted and on what terms.

A lender estimates the level of risk by looking over your record for handling loans and their repayment obligations ,many assessing your credit financial situation . Besides individuals seeking loans , being a good credit risk is highly relevant to corporations and local authorities, and even to nations. Just as individuals with a history of loan defaults are going to be considered high risk borrowers , countries with unstable governments and fragile economies also become known as bad risks and this makes it hard for them to borrow on the international markets.

Credit Score Composition

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Payment History: Makes up 35%

The first thing the borrower wants to know is that if you paid your past credit amounts on time


Amount Owed: Makes up 30%

Having credit accounts and owing debt does not mean that you are a high risk borrower


Length of Credit History: Makes up 15%

The longer your credit history is, the higher your score will be


Types of Credit in Use: Makes up 10%

They will consider your credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans


New Credit: Makes up 10%

Research shows that opening more credit accounts in a short period of time can represent a greater risk

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How long will the information stay on my credit report?

Different types of negative information will stay in your credit report will stay on for different amounts of time, so here's a list of the basics of how long they'll stay on:

Late payments: seven years

Bankruptcies (completed chapter thirteen): seven years

Bankruptcies (chapter seven): ten years

Foreclosures: seven years

Collections: (usually) seven years (it depends on how old the debt is)

Public record: (usually) seven years (unpaid tax liens can stay for indefinite periods of time)

Car Payment


Now, you're probably wondering how your credit score, credit report, and credit history tie into whether you should take a loan for your car or pay it all off at once.

Well, you wish to buy a house in a couple years, correct? Well, if you do, it would be wiser to get a loan and downpay it. While this will affect your credit score, buying a house should be a higher priority. Its affect won't be too negative, (for your credit score), so it'll be okay. Eventually it will leave your credit history, so you won't have to worry forever.

Here are a few definitions that will come in handy

What is a credit report / history?

Credit Report History

Its Importance

Credit Impact