Fair credit reporting starts with you, the consumer

As consumers, we are so often at the mercy of corporations whose biggest concern is their own profitability. We have no control over erratic gas prices, rising grocery bills, and increasing insurance rates. However, there are a few things that affect our financial well-being that we do have a say in. One of the most important is our credit reports. You can, and should, be an active participant in your personal credit report. Knowing what is on your credit report, and being prepared to fight any listings that you find questionable, can save you hundreds of dollars or more each year.

Credit reports have a huge impact on your everyday life. These reports influence how much interest you are paying for your car and mortgage loans, what your monthly insurance premiums will be, and they can even have an impact on whether or not you are hired for a particular job. Yet many of us do not know how credit reports work, what information is found in a credit report, or whether or not it even matters. If you've never taken the time to find out who compiles your individual credit report, where the information comes from, and why you should care, now is the time.

Credit bureaus collect information about you on a regular basis. This information comes from merchants, lenders, banks, landlords, utility companies, etc., and is an indication of how you spend your money, how many credit cards you have, what the balances are, and whether or not you pay your bills on time. Think of your credit report as a financial "report card". The 3 major credit reporting agencies that collect this information and give you a grade (your credit score) are Equifax, Experian, and TransUnion.

The next step in the credit reporting process comes into play when you go to apply for a loan, request a new credit card, or apply for a job. The lenders and merchants then turn to these credit bureaus to provide them with easy "snapshots" of your spending and bill paying habits. This allows them to quickly determine whether or not they want to lend you money and, if so, how much they will charge you in interest fees to borrow their money. A clean credit report shows that you pay your bills on time and keep your credit balances low and typically results in lower interest rates.

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