One of the most important tasks to complete as a consumer is obtaining an annual copy of the most current credit file on record. This can be done via a free credit check through any of the four major credit reporting bureaus. All four, Transunion, Experian, Equifax and, in Australia the CRAA, have easily navigated websites or can be reached via telephone or regular mail. Each of the bureaus allows one free credit check per year, per consumer. Depending on the originating country of a particular loan, any of these four bureaus could have credit file information for a consumer. Completing the process of receiving a current credit file from any of the bureaus, preferably all three, is essential to managing and maintaining an accurate credit rating.
There are many reasons why a business would review a consumer credit file, such as processing a loan application or application for employment. Normally, hiring managers will request permission to review an applicant's consumer credit file to ensure they are hiring someone who is conscientious and responsible. Loan applications are normally processed only after the lender has reviewed the consumer credit file for the applicant. There are occasions for which the consumer credit file is not necessary, but those loans are usually for consumers without a credit file history or with a poor payment history.
Individuals with a low credit, or FICO, score should not be discouraged and assume they will not find employment or a loan. Especially early in life, starting just after the minimum hiring age, there is not enough history for lenders to verify any type of payment record for the consumer. Younger adults should use what credit they are able to obtain wisely, in order to maintain a good score and avoid starting their financial life on the wrong foot.
Another excellent reason for consumers to obtain an annual free credit report is to verify they have not become the victims of identity theft. This type of theft is rampant around the globe and only consumers can protect themselves; there is no sure-fire way for a third party to protect personal information.
In addition to contacting the four credit bureaus annually, there are several services available for a subscription fee that monitor consumer credit files and alert the consumer if there is activity on their file. These services have continuous access to the subscriber's credit file and monitor it for new loan or inquiry activity on a daily basis.
A lender's main criterion for assessing consumer risk is their credit file score. Any significant downward change in the consumer's rating can negatively affect their ability to obtain even the smallest of credit accounts. With a poor credit file rating, consumers may also find it difficult to obtain funding for larger purchases such as homes, automobiles and major appliances. If they are able to find approval with a lender, it is usually at a much higher interest rate than if they carried a good credit score.
Obtaining an annual free credit check can also allow a consumer with poor credit score to work with lenders listed on their report and pay off bad debt to improve their score. This can be a lengthy process, but it is well worth it to gain access to needed funding at lower interest rates and with more flexible terms. The three weighted factors that lenders consider for loan approval are payment history, financial stability and existing debts. Keeping all of these factors well balanced and maintained is key to a healthy financial future.