What are credit ratings?

A credit rating or credit report, as it is commonly known, is a record of all your credit activities since the first day you began to take out credit or borrow money off lenders. This rating presents potential lenders with the history of your credit card debts, loans, and any outstanding ballance that you may still have from a past lender. When applying for a mortgage or a loan, potential lenders will review your credit rating and will asess your eligibility to see whether you are indeed a diligent borrower who is trustworthy of paying the money back.

Different types of credit ratings

There are actually three credit bureaus that will provide a credit report and each bureau actually presents your ratings in a slightly different way to one another. Although most people do indeed choose one of these independent agencies, there is actually one other way that your credit rating can be presented.

This secondary method of obtaining your credit rating is actually a compbination of the information collected by all three agenices, presented in one coinsise report.

The three agencies are Trans Union, Experian and Equifax.

Be sure to check your credit ratings regularly.

Checking your credit ratings on a regular basis is essential if you would like to stay on top, and keep your credit score high. Not only will you be able to gauge and understand how others see you as a potential borrower, but checking your own credit ratings on a regular basis will actually help you improve your credit score.

Errors on your credit ratings.

It is a worrying fact that only 30% of credit reports and ratings are free from errors and mistakes. With this in mind, you must ensure that there are no errors on your credit report, as this can be detrimental to your credit score and your eligibility as a honest and diligent credit customer.

Credit bureaus.

A credit bureau is a profit making agency that distributes your credit ratings and reports to potential lenders. These lenders can be anything from mortgage brokers, banks, and private companies that would like to view your credit eligibility when you apply for a loan or mortgage for example.

What is on my report?

Your credit report shows a history of all loans paid off or outstanding, credit card history, car repayments and literally every type of money that you have borrowed in the past up to the present. It will also show late payments and payments that you have defaulted on.

Is the information presented by each bureau the same?

Because each bureau is independent of each other, this consequently means that the information is often presented in different ways. Each one of the three bureaus do not share your credit information, therefore the information in which they gather about your credit history is rarely the same.