People talk about credit cards, credit limits, credit history, credit scores, and credit reports all of the time. But what do all of these terms mean? Who decides what your credit score is and what is on your credit report anyway?

People may understand what their credit scores are, and what comes up on their credit report, but perhaps they do not understand who puts it all there. Of course YOU are responsible mainly for what score you get and what goes on your credit report based on your credit history, but who takes all that information, puts it into an equation, evaluates it, and scores it?

The people who are responsible for calculating your credit score and updating your credit report are part of what is called a credit bureau. These are also called credit reporting agencies. But still, who are these credit agencies, what all do they do, and how does that affect you and your ability to buy on credit?

Credit Bureaus

The three main credit bureaus are Experian, Equifax, and TransUnion. They are the primary sources that provide a person’s credit report. They are who you go to when you want to get a copy of your credit report, and they are who you talk to when you have an argument concerning possible errors on that report. They also calculate your credit score, and all of this is based on your credit history, or the management skills you have developed or lacked within the time you have held a credit account.

You’re Being Reported

Whenever you do business using credit, the lender you got the credit or loan from, like a bank, credit card company, or department store, is connected to the credit bureaus. They report, to the credit reporting agencies, your practices concerning your credit card or loan payments, how far in debt you are, how close to the limit you are, and how much extra you may be paying on your bills each month. They report anything and everything that you do, whether good or bad, that will portray how well you can handle credit.

Three for Free

Credit reporting agencies allow you to access your credit report once a year for free. This means that you can get a report from all three of the major bureaus for free once a year, therefore allowing you a total of three free credit reports per year. This is a more recently added right given to credit holders, and has only been in effect nationwide for a few years.

It’s easier to understand your credit scores and your credit report once you understand who organizes them. It is also helpful to know where to go if you have a problem with either of these. Do not be afraid to take any problems you have to these credit reporting agencies, because since they have so many people and reports to worry about, they cannot fix your problems without you helping them to recognize those problems.

These days, people talk about credit cards, buying on credit, getting loans, requesting credit reports, credit card fraud, credit scores, and etc. But what do all these terms mean, and why are they so important to people in today’s world? What is a credit score, anyway?

Your credit score is pretty much the base of all of the terms previously listed. It is what will determine how much buying power you have in the market today. Your credit score is what determines how much money you will pay to spend the money that you do not have.

What is it?

A credit score is a number that is determined by a rather complex equation, based on your credit report. Your credit report is a detailed history of your credit spending habits. This report will tell credit bureaus how well you can manage credit, how quickly you can pay your bills and get out of debt, and how far you will go before you hit the point of bankruptcy.

Your credit score is calculated by the three major credit reporting agencies, or credit bureaus, known as Experian, Equifax, and TransUnion. These credit bureaus, though they have the same job, will often have differing credit scores for the same person, because they may not all use the same equation. However, if they show a difference, it will not be one big enough to affect, overall, your ability to get an open credit line.

What Does My Credit Score Determine?

Your credit sore will determine your ability to buy on credit, because it reflects how well you have paid back the money you have owed in the past. If you apply for a loan and get denied, it is most likely because you have a bad credit rating, and the lenders you applied with do not believe you have the ability to pay the loan back. If you apply for a credit card and not only get accepted, but get an over-the-rainbow amount of money that you could set as your credit limit, it’s probably because you have a great credit score, and the credit card company you applied with trust you with that huge amount.

What Does My Credit Score Affect?

Your credit score can also affect you when you are applying for a job. Often, your potential employers will check your credit score, with your consent, of course, before they agree to hire you. This is because they want to test your integrity, and a great way to do that is to see how well you have paid your bills and how far in debt you are. This can either be a bad thing, or a good thing, depending completely on your credit score.

It is amazing how much depends on your credit score. Managing your credit takes work, but it can, and has been done before. Your credit score is basically just a grading scale. If you have good spending habits, you will get a good grade on your report, and therefore giving you more opportunity.