Introduction to Credit Bureaus, Credit Reports and Credit Scores
It
is amazing to us how many people think that the credit bureaus or
credit scoring companies are government entities. Here's the truth. The only thing these "businesses" have in common with the government is that they are regulated
by it. The information they collect is sold for a profit to other companies. The companies who purchase this information feel that there is a risk involved in establishing a business relationship with you. Some of the types of companies who purchase this information are businesses interested in loaning you money, giving you employment, or selling you
insurance. To them, your credit score is a way for them to see what kind of a risk you will be to their business. Because of this, your credit report (or credit file) is one of the most important records associated with you.
Here's what should concern you about your credit reports and more importantly, your credit scores. Based on available data, over 70% of credit reports contain some sort of inaccurate information. That means that there is more than a 70% chance that your credit report is NOT accurately portraying your level of risk to those companies purchasing the information, meaning that you may be paying more in interest than you should. It may also mean that your insurance rates are higher or that you could potentially be denied employment.
At the Debt Free project we do not advocate credit repair. We do however advocate credit score management. Before we get into the differences between "credit repair" and "credit score management", take a few minutes to really understand what your credit score is and how it can impact you. Next Page... "Understanding Your Credit Score"