Understanding Your Credit Report and Why it Matters
Everyone becomes concerned about their credit report and credit score at some time in their lives. Oftentimes, it’s when financing is needed for a major purchase, such as a home or vehicle. Yet your credit report can become an issue at other times, as well, such as when you’re trying to rent an apartment or obtain a new job.
What exactly is your credit report, and what information does it contain? Most people who’ve never seen their own credit report are amazed at the amount of information it contains. Your social security number, birth date, present and former addresses, amount of money you earn and even your place of employment are all part of your credit history. If you’ve ever been arrested, sued or filed for bankruptcy, that information will also be included. Credit reports also contain information about whether or not you’ve paid your bills and debts on time over the course of your lifetime.
Credit reports are generated by credit bureaus, and they receive the information they contain from businesses and other consumer reporting agencies. Experian, Equifax and Trans Union are the three major credit bureaus that collect information and compile it into your credit report. They then sell your credit report to businesses, employers, landlords or creditors upon request. You have access to your credit report, as well as information on the sources of what’s reported.
Identity theft is one reason more and more people are regularly checkign their credit reports. Consumers are also more interested in their credit histories today due to the “credit crunch,” as it’s become more challenging to obtain loans and other forms of credit. It’s wise to review your credit report on a regular basis instead of waiting until good credit is an issue. Checking up on your credit yearly can help you prevent being denied insurance coverage, employment, the loan you need and even your next apartment rental.
Even those who are confident their credit is excellent are advised to check their credit scores at least once a year. This is because it’s a very simple matter for credit bureaus to obtain erroneous information. You have no way of knowing what’s in your report until you look at it.
You can take steps to clear off old or incorrect information, but it takes time. This is why monitoring your credit history is a better approach than waiting until you’re in need of the great credit score you believe you have. It takes some time and effort to monitor and improve your credit history, but it’s essential if you want to obtain favorable loans, credit approvals or enjoy a host of other benefits associated with a great credit score.
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