What To Know About Credit Reports And Why They Exist
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.
To begin with, poor credit can cause you to pay more for everything that you finance and even things that you don’t normally finance but which you are paying for on at least an occasional basis. For example, there are more than several states in the country that allow auto insurers to pull credit to come to a determination of how much to charge for an insurance policy.
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.
Another way in which credit reports are being used these days is by employers, who may pull a credit report from one of the three major credit reporting bureaus (Experian, EquiFax and TransUnion) and look it over before making a hiring decision. One thing to know is that a prospective employer must obtain permission from the prospective employee before doing so.
What all this means is that credit and the need to have it and also the need to assess just who is a good credit risk and who isn’t is a a fact of life in our society these days. Mailboxes can be stuffed full of credit offers from organizations that have accessed what the credit bureaus call a quick look report and sent out an offer for “possible” credit because of that quick look, for example.
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.
All of the above highlights why it’s important for a consumer to pull his or her credit reports on an annual basis. By law, each of the reporting bureaus must provide a free credit report to a consumer who asks for it. There won’t be a credit score on the report (that costs money) but the report itself can be a good way to see just what each bureau might have on a consumer, which is a good thing to know.
Understanding and appreciating credit reports and why they exist becomes necessary anytime one is going to apply for credit and they want to make totally sure they’ll be successful in the application for it. Bad credit thus calls for credit repair.