A point comes in everyone’s life when they will need credit. Perhaps it comes during a financial crisis, but most often it comes from a desire to fulfill a dream. You might want to buy a boat, a car, or a home. These wants create a need for loans and mortgages, credit cards, and lines of credit. In the United States of America when you apply for credit, the business you request the loan or line of credit from will ask you for information about your credit history. Next, this business will turn to another company that will collect all your financial data, compare your history with other consumers, and give you a credit score ranking. If you have ever asked yourself “where do credit reports come from?”, then you should know they come from these companies who make it their job to collect and organize the credit scores of everyone who uses credit.
You cannot really expect companies to simply hand you credit. There must be some introduction to your history for them that involves knowing how you have dealt with banks, finance companies, or other agencies in the past. Your credit report will show your prior credit activities, such as whether or not you have taken out any loans or lines of credit in the past. This report will also show if any actions have been taken against you for late or unpaid bills.
The business or banking institution you go to for credit will take the information you have given them such as your name, address, place of employment, and social security number, and they will pay another company to find out the information they need to know about you. This company, known as a consumer reporting agency (CRA), will provide the lender with information that has been gathered and stored on a large database. CRAs began to collect information on you as soon as you started using credit. This history is extremely important to anyone who is thinking of extending you credit.
If someone told you that they had taken a look at your financial credit score, and you wondered where the score came from; chances are good that the information came from one of three CRAs. Equifax Inc, Experian, and TransUnion are the three largest American agencies who maintain and gather information on consumer credit holders. If this sounds like a big job, it is. They have records on over 500 million credit holders worldwide.
If you have ever used credit anywhere, you should take a look at your credit report. It is a good idea to know your credit score and to work on it if it is poor. You also want to be sure there are no errors on your report. Because of the huge volume of data collected on credit holders, it is possible for mistakes to be made. Under the Fair Credit Reporting Act passed into American federal law in 1970 you have a right to ask CRAs for a copy of your report if you are turned down for a line of credit or a loan.
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