Q & A - Questions and Answers

What is a credit report?

The three major credit bureaus in the United States: Experian, Trans Union, and Equifax, are in the business of exchanging information. When you apply for a loan of any kind, the creditor pulls your credit report from at least one of these bureaus. There are many other credit bureaus throughout the United States, but they are mainly affiliated with one of the major three.

These credit bureaus collect and maintain information on the vast majority of Americans, but they are not affiliated with the government in any way. The credit bureaus are for-profit corporations and they sell your personal information for money.

The credit bureaus receive your personal information through the same lenders who grant you credit. They have agreements with each of these credit grantors that require the credit grantor to inform the credit bureaus of everything that occurs in your relationship with the credit grantor. If you make a payment late, the negative credit listing is quickly reported to at least one of the three major credit bureaus and is added to your credit history. Credit reports are not just a record of how you are currently managing your credit accounts. Credit reports are histories of everything you are doing with your credit now, and everything you have done in the past.

The credit bureaus collect this information, list it on your credit report, and then sell it to other credit grantors who wish to see your credit history before they decide to lend you money. The credit grantors who review your credit are especially interested in any negative credit. If you have shown any tendency to pay late, or to disregard your financial commitments in the past, then the creditors' computers will immediately reject your application.

Just like when you were in high school, your credit report is your financial report card to the world. Did you know that employers with increasing frequency are also requesting your credit files to screen potential applicants? Their rational for doing so is that if you are or have been conducting your personal finances in ruin, it probably is a clear indication of how valuable you will be to a potential employer. Think about it! Who would you hire to represent your company? The individual with good credit, or the person with a number of late pays, charge-offs, delinquencies, repossessions, tax liens, etc.? That's why it is so important to monitor your credit files and keep them as close to perfect as possible!

Suggestions: