Credit Bureaus
Credit bureaus collect consumers information that is reported to them by creditors. Information such as a consumers address, phone number, age, employer, income and payment habits are reported by creditors to credit bureaus. Credit bureaus add the information reported to them to the consumers' credit file. Companies access a consumer's credit file to help determine how much of a credit risk the consumer is. A credit file helps a company predict if a consumer will likely pay debt or not by looking at the consumer's past payment history and employment history. Companies also look at a consumer's credit file to see how many open loans and how much debt the consumer is in. Generally, companies determine that a consumer whohas a high debt ratio compared to their income is a high risk. Consumers that are deemed high risk can have a difficult time obtaining loans.
Information Obtained from Credit Applications
When a consumer applies for credit with a company, the company reports information obtained from the consumer's application to the credit bureaus. A consumer's employer, length of employment, income, address and length of time at address are common pieces of information asked on a credit application that companies report to credit bureaus.
Information Obtained from Loans and Accounts
When a consumer obtains a loan or opens an account with a company, the company reports the amount of the loan as well as payment history. If the consumer is late on payments or defaults on the loan, the company adds a negative report on the consumer's credit file. If the consumer pays the loan payments on time and pays off the loan, the company adds a positive report to the consumer's credit file. Negative reports lower a consumer's credit score and decrease the likelihood of the consumer being able to obtain future loans. Positive reports increase a consumers credit score and increase the likelihood that the consumer will be able to get future loans. Consumers with low credit scores usually pay higher interest rates on loans if they can get a loan at all. Consumers with high credit scores usually can get lower interest rates on loans.
Evictions and Judgements
Court judgments against a consumer for an unpaid debt are reported to credit bureaus, as are court ordered evictions. Landlords usually check a prospective tenant's credit before renting a property. If a prospective tenant has an eviction on his credit file, it may be harder for him to get accepted as a renter. Along with the judgeent and eviction information, the amount of the debt will be listed on the credit file.
Bankruptcy
If a person files bankruptcy, the information is reported to the credit bureaus. The information includes the type of bankruptcy and which debts were included in the bankruptcy proceeding.
Bad Checks and Bank Accounts
Bad checks and bank accounts closed because of a negative balance are reported to check verification services. Check verification services are a type of credit bureau that banks and stores use. Banks use check verification services to help determine if they should offer banking services to a consumer. Consumers who have had their bank accounts closed because of a negative balance or for bounced checks can have a difficult time opening up bank accounts. Many stores will not accept checks from consumers who have a bad check report recorded with the check verifications services that reports
0 comments:
Post a Comment