Understanding and managing your credit is an important part of financial health.

It's never too early or too late to start learning about it!

No matter what has happended to your credit you can deal with it!

What is Credit Reporting?

Credit reporting is a system where companies called Credit Bureaus collect information about your financial behavior and put it into a credit report. This report is used by lenders, landlords, and others to assess how risky it might be to lend you money, rent you an apartment or offer you a job.

What is a Credit Report?

A credit report is information about you that has been gathered by CREDIT BUREAUS of your financial behavior. It includes information like:

• How many credit cards and loans you have.
• How much money you owe.
• Whether you pay your bills on time.
• If you've ever filed for bankruptcy.

Who are these Credit Bureaus?

The Big 3 Credit Bureaus, Experian, Equifax and TransUnion, are companies that collect financial information about individuals. This information is used to create credit reports and calculate credit scores.

How do Credit Bureaus make money?

Selling Credit Reports and Scores

The primary way credit bureaus make money is by selling these credit reports and scores to lenders, landlords, insurance companies, and sometimes employers. These organizations use this information to decide whether to lend you money, rent you a house, insure your car, or sometimes even hire you for a job.

Credit Bureaus also charge a fee to put information in your credit report.

Subscription Services

Credit bureaus also offer subscription services to consumers. For a monthly fee, you can get regular updates on your credit score, alerts about changes to your credit report, and other credit monitoring tools.

Selling Analytical Services

Credit bureaus have a lot of data. They use this data to provide analytical services to businesses. For example, a credit card company might want to know what kind of people are most likely to pay their bills on time, and a credit bureau could help with that.

Your credit report will likely be different between the 3 bureaus

The reason for that is it costs companies every time they report to the credit bureaus. This is why the credit bureaus report anything reported to them. The company reporting paid to have it there. A credit bureau is a business trying to make a profit and the customer is always right.

You are not their customer. You are the raw material that helps make up their product, your credit report.

Your credit report and everyone in your marketing demographic's credit report is what they sell and they also sell the ability to report to them. What a great racket. They believe and defend anything a paying customer tells them so that they can maintain product integrity or the illusion of it.

Because it costs money to report to them a company may not feel it necessary to pay this fee to all three bureaus.

Even worse than that some companies only report to a credit bureau if they are reporting derogatory information. They will not even bother to report a good payment history becauseit cost them to do so. That type of reporting can only negatively effect you! I personally consider it a bit predatory. You can form your own opinions.

The three major credit bureaus share information with eachother. In addition to that old accounts and debts are sold to new companies that will report them as new accounts to a different bureau.

This is why no one can guarantee to remove a negative account forever and you need to learn to do this yourself even if you decide to hire a credit repair company to do this for you. All debts and accounts are resold as junk debt to collection agencies endlessly, forever, for pennies on the dollar of the original debt.

Don't worry though, once you know how to deal with it there is nothing to it. You just put the new companies name in the same letter you used before and send it off.

While credit bureaus provide a valuable service, it's important to check your credit report regularly to make sure the information is accurate. You have the right to dispute any errors you find.

What is a Credit Score?

A credit score is a number that summarizes the information in your credit report. It's kind of like a grade for your financial behavior. The higher your score, the less risky you appear to lenders.

Why is Credit Reporting Important?

Credit reporting is important because it helps lenders decide whether to lend you money and at what interest rate. If you have a good credit report and a high credit score, you're more likely to get approved for loans and credit cards with lower interest rates.

How Can You Improve Your Credit?

Here are some tips to improve your credit:

• Pay your bills on time.
• Don't borrow more money than you can afford to pay back.
• Don't apply for too much credit at once.
• Check your credit report regularly for errors.
• Dispute and demand documentation of any negative items in your credit report

Remember

The credit system, like most institutions, is set up to take advantage of people with low information.