Plain and simple a credit report is a historical record of your use of credit. A credit score is a numerical “grade” whose calculation is based on that history in your credit report. FICO is a registered trademark that happens to represent the apparent gold standard and is the most used credit score by credit card and other lenders.
Other than your credit history, a credit report retains information from applications. Each time you complete a credit application, that information is stored as self-reported. None of the information is cross-verified by each agency. This makes room for errors as well as the compilation of superfluous data. It’s wise to check your report and correct the history, even that history that is not calculated into the FICO score.
You report your income on an application. The place of work and position will be stored. Income or Salary information is not stored and is not a part of your credit history. Income and expenses clearly factor into whether you will be approved for many loans, but income is not reported. Net Worth, Income, Title or Position at employment, whether you are/are not actually employed, are not verified and do not appear unless reported by you. If you are fired, that fact also, is not reported. To be clear, any application will ask you these questions. And, so the information hits the report. But, credit reports are not verified by an army of investigators looking for information.
Is all Debt Reported?
Any debt you owe, if it comes to the hands of a professional collections agency will appear front and center…even if the original creditor did not share the information. Lots of small accounts, the cable bill, your wireless service does not make it to your credit report unless you fail to pay, and a collections company takes over.
Medical debt is not supposed to be reported. However, most unpaid medical quickly moves into a collection agency and shows up at break neck speed on your report. Some states have made attempts that have no medical debt on a report. Just the same, when a collection agency is brought into the mix …beware.
When you buy anything, like a home, and the seller is the lender—or for most any private loan—nothing will appear on your credit report. Credit reporting requires that the creditor have a membership or contractual relationship with each credit reporting agency. Most individual lenders do not qualify and do take the time to officially report.
Your faithful, timely payment of apartment rent will not show up unless you act and pay a service that handles and verifies posting the historical record. This is a new option and we will cover this in one of our short articles.
Debit cards and pre-paid cards have no role in credit and appear nowhere on credit reports.
Another important thing, unpaid parking tickets as well as many municipal or city-based bills have an odd way of appearing on your report. Don’t avoid paying them.