How to Protect Your Credit Score and Avoid Having Your Credit Information Used Against You
Credit bureaus gather account information from creditors and provide this information to a consumer reporting agency and a credit reference agency. These agencies use the information to help you make important financial decisions. Having a clean credit report is crucial for getting a good job. Fortunately, there are many ways to protect your credit score and avoid having your account information used against you. Below are three ways to avoid having your credit information misused. And remember, the sooner you act, the better.
Firstly, you should know what your credit report contains. This includes personal identifying information, such as your date of birth, social security number, and employer information. It also includes accounts you have, including their name, account number, and payment history. It may include the highest and lowest balance, as well as the date you opened them. Your account history may also include collections, which refers to debts you sold to third parties for collection. If you’ve applied for a loan or received credit within the past two years, you may also see your account balances in this report.
You can also opt for an annual credit report from the credit bureaus. The bureaus gather this information from various sources and sell it to lenders and individuals. While credit bureaus don’t determine whether you’ll qualify for the best credit cards, they do sell your credit information to legitimate businesses. In addition to their work in determining credit scores, the bureaus also collect payment information. They can then consolidate this information into one comprehensive report for consumers.
Besides providing detailed information, credit reporting allows borrowers to build a credit history that can be used as reputational collateral for formal credit outside of traditional lending relationships. This is especially useful for new and small businesses. In the past, credit bureaus have helped protect the access of new borrowers and small businesses to formal credit during the financial crisis. The International Finance Corporation and Miller publish a comprehensive guide to credit bureaus and their role in the world economy.
Generally, the three major credit bureaus receive data from different sources. Creditors typically report information to all three of the bureaus, but they may only furnish this information to one if the account is owned by a third party collection agency. Fair Isaac Corporation and VantageScore are two of the most common credit scoring companies. Each company uses a different algorithm to determine a credit score. While they share similar data, they use different methods for calculation.
American Express reports to all three major credit bureaus once a month. Changes to your American Express account may appear on your report immediately or take a month or more to update. Therefore, paying your bill before you receive the statement will affect your credit report sooner. Amex has not responded to my request for more information, but I recommend checking with them about this before applying for new credit. If you want to improve your credit report, do it.