Individuals may give little thought to credit bureaus and what they do until they decide to request a loan to make a purchase and are denied credit or charged a high interest rate because they have a low credit score.
In the United States, the three main credit bureaus are Equifax, Experian, and TransUnion. Although these companies do not decide whether or not an individual should be given a loan, they do collect information, consolidate the information into credit reports, and sell the information to creditors (i.e. banks, credit card companies, mortgage lenders) who use the information to decide if they should lend someone money.
What information is collected by the Credit Bureaus?
The credit bureaus are allowed to legally collect your identity, including your name, Social Security number, Date of Birth, and some employment information. They also maintain a list of all of your current credit card accounts, mortgages, student loans, and passed due accounts. Additionally, they will have access to your public records and can include information about all tax liens, court judgments, and bankruptcy filings.
Why should I care about my credit report?
If you never intend to rent or purchase a home or car, need to get a credit card, or have to find certain types of employment, you may never care about your credit report. The rest of us, however, will want to understand what is on our credit report because it is likely our employer, lenders, insurers, and others may use the information to assess our financial stability.
Furthermore, because a potential employer or homeowner may use the information to decide whether they want to hire you or allow you to rent their home, a credit report can be very important.
Can I get a copy of my credit report from the credit bureaus?
Credit reports are now available annually for free from each of the three credit agencies. It is a good idea to request credit reports from all three agencies to get a complete picture of your credit history. Credit reports should also be monitored periodically to ensure there are no errors on your credit reports.
Filed bankruptcy how long will the bankruptcy show up on my credit report?
Negative information about your credit history can remain on your credit report for many years. For example, a bankruptcy filing may remain for seven to ten years, and lawsuits and judgments may remain for seven years or until the expiration of the statute of limitations.
Any negative financial action which is reported to the credit bureaus will lower your credit score. Additional information that can affect your score includes the number and types of accounts you have, your payment history for these accounts, the amount of available credit you have and are currently using, pending collection actions, amount of outstanding debts, and the age of your accounts.
Ensuring your credit score remains high can be very important. To make sure you understand how to protect your credit score review our recent article, “What common mistakes can lower my credit score?”
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