Getting to Know the 3 Credit Bureaus

Did you know that there are 3 credit bureaus that actually monitor your credit each and every month? That’s right! They are Equifax, Experian, and TransUnion. Each one is located in a different region and each lender that has a line of credit that is open with you reports the status of your account to these credit bureaus. There is actually a fourth credit bureau that is in operation called Innovis, but lenders don’t seem to use this bureau to factor in the information that need to approve or deny you a line of credit.

Each Credit Bureau Is Independent of the Other Ones

Many people think of the credit bureaus as a conglomeration like OPEC is when it comes to oil distribution. They picture the executive officers of these three agencies all sitting together with a cigar in one hand, a wad of hundred dollar bills in the other hand, all conspiring to lower the credit scores of all the customers that they have worldwide. The truth, however, is far from that. Each of the major credit bureaus operates independently of each other and has their own stockholders to which they must report to every quarter. They raise capital by encouraging lenders and credit providers to report what their customers are doing, and in return, they might offer discounted credit checks on potential new customers.

Why Is It Important To Order a Free Credit Report Every Year From All Three Agencies?

Just like every other for profit agency on the face of this planet, the three credit bureaus are highly competitive with each other and are always looking for an advantage. Because of this, they very rarely share any information that they have obtained with their competitors. This gives them leverage to get more credit checks sent through their agency instead of the other two major competitors. This also means that there is a different set of information about you at each of the different credit bureaus.

In order for you to have the most complete picture of what your credit score truly is, you will need to take a look at each report to determine what information has been reported on it. Otherwise you may very well find not find the inaccuracies that the other bureaus may have and be wondering why you can’t get approved for that new car loan that you need because of your rapidly expanding family.

Bad Credit Can Be the Death Knell of Any Application

Your annual credit report says a lot about what your financial decisions have been over the course of a credit line, and your credit score is a pretty good indicator of how much of a risk you are as a customer from the standpoint of the lender. With a bad credit score, you are virtually guaranteed to have an application for credit denied. On the off chance that it isn’t denied, you’re going to find that the interest rates are pretty high and your repayment terms are pretty unfavorable. That’s all because the lower your credit score is, the higher risk you present, and that means a lender will want to get as much money out of you that they possibly can before you end up not being able to pay them back.

So If My Credit Isn’t So Good Right Now, How Can I Raise It?

One of the easiest ways to raise your credit score is to pay as many of your bills as you can on time. If you’ve had some unfortunate circumstances and you’ve got some accounts in a collection status, then it helps to get those paid off as soon as possible, or better yet – get a payment arrangement approved before they even report to a credit bureau that they have an account of yours in collections. In addition to paying your bills on time as much as you can, the ability to maintain your credit lines in a valid, open status will help you out. Making more than just the minimum payment a few times a year can also boost your credit score a few points here and there, as can not applying for any additional credit unless you absolutely need it.

Avoid the pitfalls of bad credit scores, such as bankruptcies and foreclosures, can also help to keep your credit scores high. If you haven’t had an adverse event like a debt judgment against you, then your credit score is probably pretty good, even if you have missed a couple payments here and there. The average credit score in the United States is 720 – and considering an 850 score is perfect, most average Americans have better credit than they think they have.

To make sure that you are one of those that has great credit instead of fair or poor credit, it becomes important to make sure you are checking each of the 3 credit bureaus consistently to make sure nothing nefarious is going on. From credit monitoring to a yearly free credit report, there are a number of ways for you to monitor your credit starting today. Choose the one that’s right for you and start making sure your score is the best it can be all the time.