These days, almost everyone has one form of credit or another.
We use credit cards to buy gas and food, charge department store items, and pay on lay-away for furniture and appliances.
Having bad credit can hinder you ability to buy a house, refinance it at the best terms, purchase a car. Good credit gives you access to the best interest rates and terms on all sorts of loans, from credit cards to mortgages.
Of course, someone who has excellent credit doesn’t need the best terms and lowest interest rates as much as someone who has less than perfect credit – but such is the way of the world.
There are three major credit reporting bureaus whose sole job is to gather information about your spending and payback habits. They gather credit information on a daily, weekly, and monthly basis from credit card companies (like American Express, Visa, MasterCard, Discover, and others), mortgage lenders, utility companies, department stores, banks, tax and court records, and sell that information to companies that extend credit to consumers – mortgage bankers and brokers, finance companies, and department stores.
When they receive information, credit bureaus combine it with what they already have on you and update the file. If you pay off a loan or a late on your Visa bill, that information is entered into your file and made available to companies that purchase a credit history to check on your financial health.
Credit reporting companies sometimes share their file information with each other, which would lead to the conclusion that all credit histories are created equal. Unfortunately, that isn’t the case. Crucial data is often overlooked, numbers are transposed, people with the same name have their credit histories switched, and so on. That’s why you should check your credit at least once a year.
Your Credit Report
A credit history is your financial autobiography. It lists your name, current and previous addresses, phone number, Social Security number, date of birth, current and previous employers. It may also have your spouse’s name. It also lists the following information:
Credit accounts: Date opened, credit limit, loan amount, balance, monthly payment, and how you’ve made payments on the account (on time, late, or not at all).
Applicable public records: Federal district bankruptcy records, state and county court records of tax liens and monetary judgments, and, in some states, overdue child support.
Credit inquiries: List of companies who requested a copy of your credit report, and when.
“Statements of Dispute”: Consumers and creditors may make a 100-word statement explaining a credit problem or giving the factual history of an account. These statements are typically added to an account only after you’ve officially disputed its status, the account has been reinvestigated and no one can agree on the account status. In other words, as a last resort.
What doesn’t your account include? Data about your race, religious preference, sexual preferences, political preferences, personal lifestyle, medical history, criminal history, or the names of friends and relatives.
Checking Your Credit History
You should check out the current state of your credit at least once a year. And, if you suspect someone has stolen your credit history, check it out more often. If you’ve never checked out your credit history, you’ll find it’s easy to do, relatively cheap, and can save you a lot of anxiety and anguish down the line.
There are three major national credit reporting agencies:
Published: Oct 17, 2003