Understanding Your Credit Report: 8 Frequently Asked Questions
Rodgers Lungu, country supervisor at TransUnion Malawi
Lilongwe - Wednesday, 11th March 2020 - If you’re not exercising your right to access a free credit report once a year from TransUnion, or any other credit bureau, you could be putting your financial health at risk.
Regularly reviewing your credit report should be at the top of the list of your personal financial habits. It can tell you the state of your financial background, your personal payment history, and your creditworthiness. It even flags identity theft and consumer fraud. To benefit from reviewing a credit report, though, you must not only read and understand it but know how to use the information it contains to your advantage.
What is a credit report?
A credit report is a record of your credit history and payment behaviour over the past seven years, that is maintained by credit bureaus, such as TransUnion. It contains both positive and negative information about how you manage your credit. Your report includes:
Personal information: Your name, ID, address, marital status, employment information and contact details.
Account information: A list of every bank and business that’s lent you money, your credit limits, loan amounts and how you are managing them.
Current financial information: Your level of debt, and how many times you’ve applied for credit recently.
Enquiries: Who has viewed your credit profile and for what purpose.
Negative information: Accounts where you have made late payment or no payment at all.
How does it get created?
Every month, lenders send information on your credit and loan history, and your payment record, to credit reporting companies like TransUnion. This information is then analysed to create your credit report.
What’s the difference between a credit report and a credit score?
They are not the same thing: your credit score is formulated from the information contained in your credit report.
A credit report is a document that contains information about your financial history and payment behaviour.
A credit score is a three-digit number based on the information in your credit report, that helps lenders evaluate how safe or risky you are as a customer. Each lender has their own criteria on how to assess your credit application.
Why is it important to have a good credit score?
Having a high credit score will not only make it easier to get credit products such as a house or vehicle loan, but it may also help you negotiate a lower interest rate. A credit report with negative listings such as defaults, as well as too many enquiries for loans or credit in a short period of time, could result in a low credit score. This means you may pay a higher interest rate, or be denied credit.
What affects my credit score?
The biggest influence on your credit score is your account payment history – that is, how you manage your accounts and whether you pay your accounts on time. Focus on paying the full instalment of every bill on time, so you’re offsetting past negatives with more recent positives. It also helps to maintain a healthy mix of credit - store accounts, credit cards, home loan, and service contracts such as cell phone accounts - to establish a good credit history.
Who views my credit report, and why?
When you apply for credit – like a home loan, a car loan, a new credit card, a clothing store account, a new cell phone contract or an insurance policy – banks and lenders will look at your credit report as part of the process of assessing if you’re suitable for credit. Other companies that may view your profile include insurance companies, landlords and even employers, but they need to get your permission first.
How do I access my credit report?
It’s easy to obtain your free credit report once every 12 months from TransUnion and other credit bureaus. Write to TransUnion at PO Box 2766, Blantyre, or visit us at Kabula House, Ground Floor, Suite 3, Corner Chilembwe & Hannover Avenue, Blantyre.
Who do I speak to if I want to dispute items listed on my credit report?
Often, consumers have errors on their credit reports that affect their credit scores. Check for mistakes, such as payments marked late when you paid on time, or negative information that’s out of date. If you see errors or discrepancies, contact the credit bureau you got your credit report from to lodge a dispute. For TransUnion, these contact details are: 01 832 324, or email firstname.lastname@example.org. Provide as much supporting documentation as possible, like receipts or evidence of payment. TransUnion will write to the listing institution and respond within the legislated 10 working day period.
What are you waiting for? Check for your free credit report today!