Your credit bureau report is a record of all the financial transactions you have made over the years. These files are kept so that lenders and banks can determine how able you are to pay back money owed.
Your credit bureau report can also serve one other very useful purpose. It can serve as a way to protect you from identity theft. If there are any errors on it you should report them right away. You can have temporary or longer-term fraud reports placed on your file depending upon the situation.
Your files indicating your financial history can also aid you in one other very important way. It can tell you what actions you need to take to relieve debt. It shows all the times you made late payments and it shows all your outstanding debts.
Your credit bureau report is not always 100% accurate, but it does provide lenders and merchants’ information about you. This info will determine whether you can rent an apartment or not or whether you can buy a car.
It also may determine whether you receive financing from a bank to purchase a home. It also may determine every single financial decision you make from now into the future.
In the U.S. most often your credit bureau report rating is based on the FICO numerical scale. A certain point system is applied to every transaction you make, negative or positive.
You receive points when you pay your bills on time, and when your income is as far above the amount of debt you have as possible. You get points taken away from you when you make late payments or when you miss them altogether.
Other factors determine your credit bureau report rating as well. For instance, how much “plastic money” do you have in your wallet? How often do you apply for a new credit account?
How many different types of financings have you applied for that you were later approved to receive? How many times were you denied financing of any kind, whether it be unsecured loans or a mortgage on your home?
The length of time that certain accounts you hold also matters. However, the hugest issue would be the amount of outstanding debt on an account, especially if the payments are past due.
If you or potential lenders do not like what is seen on your credit bureau report it is time to make a change. The first step is to say “no” to new lines of credit. Most importantly, you have to learn to say “no” to things you do not need.