The Purpose of Credit Bureaus and the ‘3 Bureau Credit Report’
You hear a lot of negative talk about the three major credit bureaus. You also hear quite a bit of talk about how the ‘3 bureau credit report’ is necessary, and how it can help you. However, you currently may be just starting out as an adult or there is some other reason why you may not understand the importance of this information.
Role of Credit Bureaus
One of the major roles of credit bureaus is to help monitor a person’s creditworthiness. This type of institution also confirms the identity of individuals applying for credit and/or verifies the background information of potential borrowers.
In case you are wondering what is referred to when people mention the ‘3 credit bureau report’ they usually are talking about documentation generated by these agencies: Experian, Transunion, and Equifax.
These three agencies essentially have access to your entire personal background. They know places you lived, where you have worked, and what loans you have taken out. They also know when you have inquired about your credit when applying for loans, credit cards, or other financing.
The Use of Credit Bureaus
Creditors such as phone or utility companies or car dealers might check your credit. They use the tools provided by or linked to Experian, Transunion, and/or Equifax in order to do so. Mostly this is done to determine your ability to pay back a loan or to make timely installment payments.
As mentioned earlier, it also is used to verify who you are. It also confirms that you are the person who is making a purchase in the event you are paying for an item in time. Credit bureaus are also consulted in the event a legal matter has ensued upon completion of a financial transaction.
Of course, the biggest concern is identity theft. This is a matter in which credit bureaus and collection agencies may be involved. This may be an instance also when a ‘3 credit bureau report’ may be needed.
Of course, the use of credit reports is also for the following purposes:
- To see how much money you currently still owe on past debts
- To show creditors how you are paying your accounts
- To reveal the different types of credits you use
- Comparison of available credit to amount of credit used
- Frequency of application for credit
- Length of open accounts
All of the above information and more is what is used to determine whether or not you will receive a loan or other financing. It is part of a overall analysis process that determines more than just whether or not you are eligible for financing.
That is, it also determines the amount of financing you would receive. Even if you are turned down credit for some reason accessing your ‘3 credit bureau’ report can help you. It can assist in future financial planning as you work hard to improve your situation.