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A credit profile is a document which provides information about someone's credit history. Credit profiles are used by lenders and other agencies which offer credit to determine someone's creditworthiness, and they are also utilized by prospective landlords and other people who might have an interest in someone's credit history. A good credit profile will make it easier for someone to access credit, and a bad credit profile can become a major stumbling block.
The profile includes a complete history of the credit accounts someone has open or has held in the past, along with information about their limits, the balances carried on them, and the person's payment history. The maximum ever carried on each account will be listed, as will information about late or incomplete payments. Old accounts are eventually dropped from a credit profile after a set number of years, classically seven.
A credit profile also often includes information about someone's employment history, along with listings of any inquiries made about someone's credit. If, for example, someone takes out a loan to buy a car, the inquiry from the lender will show up on his or her credit profile, and another lender will be able to see that an inquiry was made. The inquiry history may be used to determine whether or not credit was granted to someone, or to alert the person reviewing the credit profile to the fact that a new credit account may be in the process of being opened.
Credit profiles can be found for individuals and businesses. People who are just starting businesses should take steps to create a separate business profile. This ensures that personal credit black marks will not count against the business, and it can generate access to business loans and other types of accounts which are only open to businesses, not to individuals. Both business and personal profiles should be regularly review for errors, and if errors are identified, a request for correction should be filed.
The best way to build up a credit profile is to keep current on all credit accounts, making payments on time and in the amounts required, or in excess of the minimum. It is also a good idea to avoid carrying a balance in excess of 50% of someone's available credit on a revolving credit account, and to avoid opening two many revolving credit accounts, as this can make someone look like a credit risk. Consumers should be aware that agencies which claim to “fix” someone's credit are often highly questionable, as usually activities which alter a credit profile can only be undertaken by the person whom the profile concerns.
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