The phenomenon of credit reports and why they’re around always comes to the front of a person’s attention whenever he or she needs to apply for credit for just about anything these days. What is a fact is that a credit report has much more of an impact on almost every aspect of a person’s life than in the past, even when much of their life has nothing to do with actual credit.
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.
This is why it’s very important for a consumer to stay on top of his or her credit history. By law, each of the three credit reporting bureaus must — when asked to do so by a consumer — provide one free copy per year of the credit file they have on a consumer. There won’t be a credit score with it (that can be purchased for additional cost) but it’s a very useful tool to gauge one’s credit history.
Understanding and appreciating credit scores and why they exist becomes clear anytime an individual 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.
Related posts:
- The Importance of Credit Report
- How to Order Free Credit Report
- Bad Credit
- Your Annual Right To All Three Credit Scores
- Wait. How Long Is This Going To Be On My Credit Report? Part 1
