The Basics of Credit
What is a credit bureau?
When most people think of the three major “Credit Bureaus” (Equifax, Transunion, Experian) they are thinking of these government owned monsters that try and control their lives. What is interesting is that they are not government owned, but they are for-profit organizations that are national and independent. These agencies are owned by share holders and make credit reporting a business. So basically these agencies are keeping track of your life to make money. They are not doing it for free or as a favor, but to produce income. These agencies are regulated by federal law, and are monitored by the Federal Trade Commission.
What is a credit score?
The credit bureaus do not produce your “credit score” this is done by the Fair Isaac Corporation also known as your “FICO” score. This credit score is a world standard for measuring a consumers creditworthiness. Obviously the lower your FICO score the less worthy you look in a creditor’s eyes. The importance of watching and maintaining this score should be viewed as an investment, for if this score is allowed to drop too low then your ability to borrow at low interest rates is greatly hindered. Find out your score today.
What if you have negative credit?
Now, statistically it has been said that around 70% of the reports generated by the credit bureaus have errors. As of July 2007 the USA population was just over 300 million people. A credit report negativity does not have to come from financial mistakes or hardships you have endured. With this many people living in the United States, errors can occur due to misspelling names, wrong addresses, identity theft, or simple recording mistakes by the credit bureaus. Errors will be made. Errors that cause negative credit, lower credit scores, and eventually lowering peoples reputation with creditors.
What you can do?
Most people when asked probably have not seen a credit report in last 6 months. Because of the importance of good credit in todays economy, I can not understand why an individual would not be monitoring their credit monthly. This page is going to continue to address some basic ideas behind personal credit, my desire is to educate you, the reader, on how to build, rebuild, or maintain your credit. I would ask yourself this question. Did you ever agree to let these bureaus monitor your life?