Credit reports are the key to obtaining loans throughout your life for a house, auto, credit card, schooling or other needs. Understanding credit reports is the best way to take advantage of them since there is no getting around the fact that they will be used when you apply for virtually any type of financial or property loan. There are several aspects to your credit report that are important to understand. In fact, many people do not realize that credit reports are also used for some types of employment applications, insurance companies and even for renting a home.
There are three primary companies that provide credit reports to agencies that are inquiring about you. These companies are Equifax, Experian and TransUnion. Annually you can request a copy of your credit report from these companies and receive it for free. This is important because you need to access your credit report to make certain that there are not errors on the report that need to be resolved. Additionally, according to the Fair Credit Reporting Act, these companies are required to release you a free copy of your credit report every 12 months if you request it.
Another reason that you need a copy of your credit report is to help guard against potential identity theft. You will be able to see that unauthorized credit cards, unauthorized loans and other financial problems by reviewing your credit report yearly. Many people do not even realize that they have become a victim of identity theft until they review their credit reports. The identity theft person will open up new credit card accounts, checking accounts and even take out loans for autos or other expensive items. When these accounts are not paid, because you never even knew that they existed, the accounts will show up on your credit report for non-payment. Checking your credit report will enable you to take proper action if your identity has been stolen.
What types of items are on credit reports? The main thing on credit reports are various loans, credit card accounts that you hold. There is essentially a track record of how you pay your bills. For example, if you are late on your cable bill payment the cable company can turn the information over to the credit report agency. This will then let other people know that you are sometimes late on payments and help them determine if they wish to give you a loan and at what rate the loan should be. Other information includes arrests that have been made, law suits and bankruptcy filings. When credit reports are used for employment assessment, future employers will know all of this information about you.
Credit reports play an important factor in everyone’s lives. It is important to make sure that you check your credit report annually and try to correct any errors. You can protect yourself and your credit by understanding how the credit reports are obtained and try to work with creditors to maintain a good standing with them. Since credit reports are free to you every twelve months, there is no reason not to request one and find out what is on yours.