Credit Reporting Agency Basics: What You Need to Know for a Good Score
There are three main credit reporting agencies: Experian , TransUnion and Equifax . Each agency maintains its own file of data about your borrowing history, although the same or similar information will probably appear on your credit reports from all three agencies. Lenders may use any combination of the three main credit reporting agencies to check your suitability for credit, which is why it is important to maintain a clean credit report with each one.
What do credit reporting agencies do??
When you are issued a new line of credit, such as a car loan or a credit card, the credit reporting agencies record that borrowing in your file. If you miss making a scheduled payment, or end up defaulting on your debt, that negative borrowing behavior will be recorded, and it could affect your ability to access credit in the future. The best way to maintain a good credit score is to make sure you never miss a payment on any of your loans or credit cards.
How does borrowing behavior affect credit score?
Credit reporting agencies also use other aspects of your borrowing to determine your score, for example, the percentage of your utilized available credit line. Try not to sail too close to the limit, as it suggests that you're financially stretched. When you apply for a new credit card or a loan, that also will show up on your credit report and can hurt your score, so only apply for what you need.
How to get a good credit score
So what’s the best way to get a good credit score with each reporting agency? The simple answer is that you need to show that you can handle credit responsibly: using a credit card and paying the balance off quickly without missing any payment deadlines is the best long-term strategy. However, you also need to make sure that the credit reporting agencies have accurate and complete information on your credit history. Once a year, it’s a smart move to review your credit report and check that all the information is accurate. If mistakes exist, then you will need to contact the the credit reporting agencies to fix them.
Once any errors on your credit report have been corrected, you will be in a much stronger position to apply for credit. Financing offers are available at Mysynchrony.com.