There are three major credit bureaus, Equifax, Experian and TransUnion. They track about 63% of the population in the United States and have more than 200 million files. If you think that they keep this information to themselves, you are wrong. They sell information to lenders and to other companies like insurers and debt collectors. This is how they make their money.
The three major credit bureaus track your credit history and a lot more. They have your address and employment records on file. Lenders use personal facts to help evaluate a borrower who is applying for credit. Sometimes, personal information will determine if an individual is denied a loan. For example, if a person moves around and changes addresses frequently, they are considered unstable.
The three major credit bureaus not only make it tough to get a loan, they can ruin someone's chance at getting a job. Employers can look at a job applicants' credit reports. Around 47% of employers admit to pulling credit reports of job applicants. When they see a blemish such as bankruptcy or accounts in debt collection, they do not hire.
Credit bureaus do make mistakes. Unfortunately, the impact can be severe on a borrower. Any information in the negative can make it difficult to be approved for any kid of credit, or it will mean higher interest rates. The Federal Trade Commission reports that one in five consumers are plagued with an error in one of their three credit reports.
All three major credit bureaus recommend that people check their credit reports once a year. This can be done free at AnnualCreditReport.com. You can file a dispute if you see anything wrong, but it may take going through lot of red tape to get it fixed. Consumers sometimes find out that they have been a victim of identity theft when they see their reports.
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