What is a credit report?
A credit report is a detailed record of a person’s financial and credit history from financial institutions that offer credit.
All financial institutions are required to turn in their both good and bad accounts to credit bureaus. Credit reports are prepared by credit bureaus from the information submitted to them by these financial institutions.
Credit bureaus make these reports available for lenders, banks, and other financial entities which wish to determine a person’s credit-worthiness or financial history.
If you have tried to obtain a loan and the process was unsuccessful because of a credit issue, it could mean one of the following:
1. You have negative/bad credit, meaning that you may have unpaid instalments on a loan you previously obtained or a current account that has become dormant.
2. There is no information at all on your credit report. If you have obtained loans previously, and your credit report is empty, it means your lender has not been reporting your loan transactions to credit bureaus.
Whatever the case, your next step should be to get a credit report as quickly as possible, not pleading with your potential lenders – this won’t help. Getting a credit report would help you identify the issues in your credit history and set you on the right foot to resolve them with the reporting financial institutions.
What is a credit score?
A credit score is a numerical score of credit-worthiness, based on the number, age, and type of accounts you have, and whether you repay your debts on time.
(Bonus tip: You can watch our YouTube video to learn how to maintain a good credit history)
How to obtain a credit report
These credit bureaus receive credit information from commercial banks, micro-finance banks, mortgage banks, development banks, and other specialized financial institutions.
You can obtain a credit report from these organizations in the following ways:
1. Order a self-report.
You can order a self-report by contacting any of the three credit bureaus or visiting their websites. Ordering a self-report generally costs between ₦5,000 and ₦10,000, but if you’re a Paylater user, you get a free credit report when you apply for a loan. You will receive a detailed 3-5 page document in your email or at your postal address.
How to read and interpret your credit report
Credit reports generally contain the same information irrespective of the credit bureau you obtain them from, but structure and reporting style may differ.
They are usually divided into the following sections:
1. Personal information:
This section of the credit report contains your identifying information such as your name, email address, past and present residential and employment addresses. It will also have the report number and date of the credit report.
2. Credit history:
This section contains information about your creditors; names of past and present credit/lending institutions you have dealt with are listed. You will also find the loans you have applied for, repaid, defaulted on (if any), and yet to repay are highlighted.
Read through the credit history section very carefully. Make sure that every information in your payment history (amounts you have repaid and yet to pay) is correct.
3. Public records:
This section of your credit report will have information about legal or government actions or declarations regarding the accounts highlighted in your credit history.
The inquiries section will have information about the number of times your credit report has been requested/pulled by (potential) lenders, employers, or other parties.
5. Contact information:
Here, you will find the contact information of the credit bureau.
All financial institutions are required to turn in their books to credit bureaus. If you have negative credit, it means that somewhere in your credit history, you may have late or unpaid repayments for a credit facility you obtained, or you may have allowed a current account go dormant.
If you ever get denied a loan because you have negative/bad credit, your next step should be to get a credit report as quickly as possible, not pleading with your potential lenders – this won’t help. Getting a credit report would help you identify the issues in your credit history and set you on the right foot to resolve them with the reporting financial institutions.
What to do if you disagree with your credit report.
When you receive your credit report, read through each section as carefully as possible. If you spot any error(s) or omissions in any of the sections of the credit report, you can contact the credit bureau to lay a formal complaint. This is called a dispute.
If there are parts of the report that are not clear to you, you can also contact the credit bureau, and they can have a customer support personnel break it down to you.
Getting a credit report is like getting a health check – but financially – and we advise that you get one at least once every year.