Credit checks are official inquiries into your personal
financial behavior, particularly as it pertains to
borrowing and paying back money. The three major credit
reporting bureaus are Equifax, Experian, and Trans-Union. Each
bureau gathers personal financial data and establishes a credit
rating for the individual. The credit rating, or FICO score, is
reported to an inquiring source, usually with the written
permission of the individual. Often all three scores are
averaged for a composite score.
Frequent credit checks, primarily caused when applying for
several credit cards, may actually cause one's credit score to
drop. The credit bureaus will consider multiple credit checks
for mortgage and auto loan applications within a 45-day period
as just one inquiry. The bureaus also ignore all credit checks
made within 30 days prior to the day the score is computed.
Credit checks are no longer limited to loan application forms.
Many potential employers will use a credit check as part of
your application process. Insurance companies may use a credit
check to help evaluate your liability worthiness. Banks may
refuse to let you open an account if a credit check does not
meet their standards. A landlord may require a credit check
before renting an apartment to you, or may establish a higher
rent in the event of a poor credit rating. While supporting
statistics and civil rights issues are being explored, these
practices are becoming more common.
Many student loans do not require credit
checks, as is true with many insured or subsidized
private and government loans. But most loan applications,
especially for unsecured loans, rely heavily on credit checks
to establish the size of the loan, its payback length, and its
interest rate.
You may review your credit report for accuracy at any time.
Federal law allows you to obtain a free copy once a year, but
you may have your bank or lending institution share their
report with you. Obtain your free reports through the only
authorized site at www.annualcreditreport.com or by calling
1-877-322-8228. Study the report and report any inaccuracies to
insure the best possible credit score.
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