Most people finance their homes with mortages and pay for their cars with loans. Students often need loans to pay for college. And a lot more people make purchases with credit cards.
Credit is not given. You have to apply for it. Finance companies will not give you credit unless their know a lot about you. They reply on a credit report.
A credit report is a record of your credit activities. It lists any credit-card accounts or loans you may have, the balances, and how regularly you make your payments. It also shows if any action has been taken against you because of unpaid bills.
A company that gathers and sells credit information is called a consumer reporting agency (CRA). These types of companies collect information about your credit activities, store it in giant databases, and charge a fee for supplying the information. The most common type of CRA is the credit bureau.
There are three major credit bureaus that operate nationwide: Equifax, Experian, Trans Union. Plus many smaller companies serving local markets.
Your credit rating is drawn from your credit report, which outlines your borrowing, charging, and repayment activities. A good rating helps you reach financial goals; a poor rating limits your financial opportunities.
Since your credit report influences whether you are able to buy a home and get a job, it is extremely important to protect your credit rating by making loan and bill payments on time and by not taking on more debt than you can handle.
Check your credit for free at Annual Credit Report.
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