If you are applying for any type of credit, whether it be a credit card, a loan or a mortgage, you need to be sure the information contained in your credit reports is accurate. This is important because potential creditors will use your credit reports to decide whether or not lending money to you is in their best interest.
By looking at your credit reports and checking your financial history, lenders try to determine whether or not you are likely to make your payments regularly and on time.
If you are a United States citizen with a Social Security number, your financial history is part of your record with the credit bureaus. Whenever you apply for credit, the credit reporting bureaus access the information contained in their files and furnish it to their specific member organizations upon request.
The three major credit reporting bureaus in the United States are TransUnion, Experian and Equifax. All three of these companies possess extensive financial information about everyone who has a Social Security number. This data is what makes up credit reports.
Information contained in your credit report includes personally identifying information such as your full name, present and past addresses and your employer's name as well as important events regarding your financial history. Financial information contained in your credit report includes the following:
- Each of your loans (open and closed) as well as the loan amount, duration and type.
- Any and all other credit accounts in your name, as well as the credit limits, and the type and duration of each of these accounts.
- Your payment history on all of these accounts for the past seven years.
- Credit inquiries.
- Any Bankruptcies, Tax Liens and/or Collection records.
Creditors use this data to determine how likely you are to meet your financial obligations.
Given the fact that quite a bit of your personal financial information is indexed by the three major credit reporting agencies, it is important to know who can access it. Those who can see your credit reports include the following:
- Potential Employers
- Lenders and other legitimate creditors
- Government Agencies
- Insurance Companies
- Authorized business contacts, including landlords
In addition to providing a financial history, your credit report is also used to generate a credit rating or score. This score is a quick way for potential creditors to assess whether or not you are a good credit risk. The higher your score is, the higher the odds that you will meet your financial obligations.
Essentially, your credit report serves as your credit resume. To make sure you do not run into problems when applying for loans, credit cards, jobs or housing, it is important that you check your credit reports regularly and be sure to keep your credit report as clean and as accurate as possible.