Your credit report is a summary of your credit history. Your credit report is created when you borrow money or apply for a loan for the first time. Lenders send invoice information to credit bureaus, also known as credit reporting agencies.
Your credit rating
Your credit rating is a number that comes from the information on your credit report. It shows how well you manage your loan and how risky it would be for the lender to borrow the lender. Your credit score is calculated based on a credit report formula.
you get points for activities that show that you use the credit responsibly
you lose points for things that show you have difficulty managing your loan
Your credit rating changes over time as your credit report updates.
How is the credit score calculated?
You can’t know exactly how many points your score will increase or decrease based on your actions. Credit bureaus and lenders do not share the current formulas they use to calculate creditworthiness assessments. However, it is worth using tools such as HiRating to keep up to date with your creditworthiness in the eyes of lenders.
Factors that can affect your credit standing are:
- how long did you have credit
- if you have a balance on credit cards
- if you regularly miss payments
- amount of outstanding debts
- how close you are to your credit limit
- how many times have you tried to get more funds
- types of loans used
- if your debts have been sent to a debt collection agency
- any evidence of insolvency or bankruptcy
Lenders establish their own guidelines regarding the minimum creditworthiness assessment they need to borrow money.
If you have good credit standing, you may be able to negotiate lower interest rates. However, when ordering a credit rating, it may not be the same as the rating obtained for the lender. This is because the lender may attach more importance to certain information when calculating the creditworthiness assessment.
Who creates the credit report and credit rating?
These are credit bureaus. These are private companies that collect, store and share information about how you use the loan. There are also such as KRD which only collect information from creditors about your financial experience.
Some financial institutions may want to recognize your credit history outside the country if you request it. This may include additional steps. For example, you can request a copy of your credit report in another country and meet with your local branch representative.
Who can see and use your credit report?
Credit bureaus follow the rules that determine who can see your credit report and how to use it.
The ones that can see your credit report are:
- banks, credit unions and other financial institutions
- credit card issuers
- car leasing companies
- mobile companies
- insurance companies
These companies or people use your credit report to help them make decisions about you.