Your Credit Report Equals Financial Opportunities
A credit report is simply documentation of all of your credit activity. Any loans or credit card accounts that you currently have open will be outlined on a credit report as well as the balances for each account and a record of how often you make your payments. If you are not making your payments on time, potential companies will be aware of this information by simply looking over your credit report. This can have a negative effect for you if you are missing payment dates!
A consumer reporting agency (CRA) is responsible for gathering and selling credit information about people to other companies. The CRA will collect information about your credit activities, store the information in a network database system and proceed to charge a fee for providing this type of information to others. A credit bureau is the most widely known type of CRA and consists of three major divisions that operate around the nation.
Your overall credit score is determined from your credit report, which outlines your borrowing activities, charging activities and repayment of accounts. A strong credit score will assist you in reaching financial goals whereas a poor rating will limit your financial opportunities. Your credit score plays such an important role in your financial health that a low score can prevent you from being able to buy a home or even get a job. It is extremely important that you protect your credit score by making loan and bill payments on time and by not accumulating more debt that you can handle.
Credit bureaus are only allowed to provide information on individuals to certain requestors such as (1) creditors who are consider granting or have granted you credit in the past; (2) employers who may be considering you for employment, promotion, reassignment, or retention purposes; (3) insurance companies considering you for an insurance policy or reviewing an existing policy; (4) government agencies who review your financial status or government benefits; and, believe it or not, (5) anyone who has a legitimate business need for the information such as a potential landlord.
Accounts on your credit report are listed by type of loan-such as a mortgage, student loan, revolving credit, or installment loan; the date you opened the account, your credit limit or the loan amount, co-signer information for the loan-if applicable; and your payment pattern over the past few years. The company that you are asking to lend you money will ultimately make the decision about whether or not to grant you credit. The credit bureaus only supply the necessary information about your credit history for others.
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