Understanding And Appreciating Credit Reports And Why They Exist
1:31 AM
Understanding and appreciating credit reports and why they exist becomes necessary anytime one is going to apply for credit (and it's a mandatory thing for almost everybody these days) and they want to make sure they'll be successful in the application for it. A credit report can affect much more of a person's life these days than just whether or not a credit card is issued, for a fact.
As an example, it's important to understand that having what the credit industry refers to as poor credit can cause much more to be paid for something that's financed -- in terms of interest rates -- than if good credit existed when upon initial application. Additionally, understand that organizations like auto insurance companies are pulling credit to determine policy cost.
The reasoning behind this -- most auto insurers would say -- is that people with poor credit (nowadays, that would usually be people below a 600 credit score) seem to be higher risks in terms of claims and driving behaviors. Many experts dispute this and say that it is pure nonsense and some states have begun to outlaw the practice, but it is still out there.
Credit reports are also being increasingly used by prospective employers in assessing a prospective employee before making a hiring decision, for example. They may pull a credit report from any one of the three major reporting bureaus -- TransUnion, Experian, Equifax -- and give it a look over. They must, however, obtain permission from the prospective employee to do so.
Generally speaking, all the above just points out and reinforces the fact that all the different ways in which credit and credit assessment is used in society these days is widespread and very entrenched. Consider how many credit offers come into a person's mailbox from companies that have pulled a quick look report and then sent out an offer for "possible" credit.
These reports exist as a way of gauging a person's risk, for the most part. They can provide a 7 to 10 year (or even longer in cases where a bankruptcy has existed in the past) glimpse of a person's consumer life. Poor credit can mean a much higher interest rate on a mortgage or an automobile loan. In other words, poor credit cost people quite a bit of money over the long run.
That's why it's important for a consumer to pull all of his credit reports from the three major bureaus at least once a year. By law, each bureau must provide one free report to each consumer when asked to do so. The report will not usually contain a credit score, which is normally an additional-cost feature, but it can be a way to see what each bureau has on a consumer, so keep that in mind.
As an example, it's important to understand that having what the credit industry refers to as poor credit can cause much more to be paid for something that's financed -- in terms of interest rates -- than if good credit existed when upon initial application. Additionally, understand that organizations like auto insurance companies are pulling credit to determine policy cost.
The reasoning behind this -- most auto insurers would say -- is that people with poor credit (nowadays, that would usually be people below a 600 credit score) seem to be higher risks in terms of claims and driving behaviors. Many experts dispute this and say that it is pure nonsense and some states have begun to outlaw the practice, but it is still out there.
Credit reports are also being increasingly used by prospective employers in assessing a prospective employee before making a hiring decision, for example. They may pull a credit report from any one of the three major reporting bureaus -- TransUnion, Experian, Equifax -- and give it a look over. They must, however, obtain permission from the prospective employee to do so.
Generally speaking, all the above just points out and reinforces the fact that all the different ways in which credit and credit assessment is used in society these days is widespread and very entrenched. Consider how many credit offers come into a person's mailbox from companies that have pulled a quick look report and then sent out an offer for "possible" credit.
These reports exist as a way of gauging a person's risk, for the most part. They can provide a 7 to 10 year (or even longer in cases where a bankruptcy has existed in the past) glimpse of a person's consumer life. Poor credit can mean a much higher interest rate on a mortgage or an automobile loan. In other words, poor credit cost people quite a bit of money over the long run.
That's why it's important for a consumer to pull all of his credit reports from the three major bureaus at least once a year. By law, each bureau must provide one free report to each consumer when asked to do so. The report will not usually contain a credit score, which is normally an additional-cost feature, but it can be a way to see what each bureau has on a consumer, so keep that in mind.
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Understanding and appreciating credit reports and why they exist becomes necessary anytime one is going to apply for credit and they want to make sure they'll be successful in the application for it. Bad credit thus calls for credit repair.
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