A great part of our population lives on credit. Because of this, everything related to the credit system greatly impacts our lives. An individual’s ability to conduct business is as good as his credit rating. From credit cards to mobile phone line subscriptions, mortgages to business loans, the decision of being granted all boils down to credit ratings.
The credit reporting system is composed of three sides – consumers, credit bureaus, and financial institutions. The consumers are the regular citizens, businesses and any entity that needs to take out a loan, apply for a credit line, or have something financed. The credit bureaus are entities that compute for credit ratings, and financial institutions are at the other end of the deal. There are 3 separate credit bureaus which as Transunion, Equifax and Experian. These bureaus receive information on a monthly basis form lenders and other financial institutions. Financial institutions and creditors electronically report data every 30 days.
You get 3 different scores from 3 different bureaus. Monitor your credit standing by getting a free credit report with score all the time. You can also get a triple credit score report online. Getting a triple credit score means getting all the separate scores you have for each toy.
Financial institutions, lenders, and other business providers compute for your risk assessment. A lower risk factor means you are less likely to file a claim, therefore, will get lower rates. And getting approved is just half the battle because your payments will still depend on your risk level.
Your approval for transactions such as housing loans, car financing, subscriptions, and opening credit cards all depend on your level of risk. As you can see, most of the outcomes of transactions are dictated by your credit score.
No need to reiterate the importance of maintaining a positive credit rating. This can be done by paying your monthly invoices and other dues on time, and not letting any of your accounts or subscriptions get sold off to outside collection agencies.