What exactly is a credit file?

Your credit file is created when you first borrow money or apply for credit. On a regular basis, companies that lend money or issue credit cards to you - including banks, finance companies, credit unions, retailers - send specific factual information related to the financial transactions they have with you to credit reporting agencies.

The credit reporting agencies organize and store this information so that it can be referred to in the future, with your consent. Your credit file contains all the information that a credit reporting agency has received from companies that have extended credit to you. In summary, your credit file is a report of your financial history and performance with credit grantors.

Why is my credit file important?

When you apply for credit or want to open an account, the credit grantor wants to be sure that if they lend you money they will be paid back. The more your credit file demonstrates that you pay your debts on time, the more desirable you become as a potential customer.

If you have fallen behind in the past, a credit grantor wants to see how you have been managing your debt since then. Your credit file also shows how much you have already borrowed. Credit grantors want to evaluate your financial capacity to make monthly payments. No responsible lender will want to over-lend or encourage customers to take on more debt than they can pay back.

How is this information gathered and who keeps it? Credit information is gathered by credit reporting agencies, sometimes called credit bureaus. They store and maintain credit information about individuals by banks, financing companies, auto leasing companies, credit card companies, retailers, etc.

How can I establish and maintain a good credit rating?

There are a few simple ways to keep a solid credit rating. First, pay your bills promptly and always meet payment due dates. Borrow only the amount you can afford to repay. Draw up a budget to control your spending. If you have debts, pay them off as scheduled or even ahead of schedule. And finally, review your credit file regularly to stay informed about the details in your credit file.

Should I go to a Credit Repair Clinic to fix my poor credit rating?

You may see advertisements for Credit Repair Clinics in the classified sections of newspapers, with claims that they can "fix" bad credit reports, for a fee. Only responsible credit practices over time can improve a poor credit history. Credit counseling organizations are not the same as Credit Repair Clinics, and can offer you professional advice on how to improve your credit practices.

How can I make sure my credit file information is accurate?

Request a copy of your credit file.  If you check your credit file periodically, especially before making any major purchases or applying for credit, you can make sure there are no surprises ahead. If you believe your file contains an inaccuracy, you can take steps to correct it. Simply provide information about the disputed item to the credit reporting agency.

If you find unfavorable, but accurate facts in your file, you may be able to prevent a potentially embarrassing situation by discussing this with the lender when you fill out an application. You can also initiate immediate action to re-establish good credit.

If you have previously experienced bankruptcy, the best way to restore your credit is to obtain a secure credit card.  As long as you have been discharged, Sutton Group Realty Systems is here help.

Peter Pall

Sales Representative

Sutton Group Realty Systems Inc., Brokerage

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