There are currently three major credit score reporting agencies that operate within the USA. Those agencies are Experian, Equifax and TransUnion. The main function of these companies is to track and report your potential credit risk. This is done by having information sent to them from all of your creditors and people you deal with financially. They will look at how much you earn, how much you owe, if you pay on time, how long you’ve had a credit history, and a whole more. These items are then listed in your credit report from each agency. Furthermore, they will try to quantify all of this information by boiling it down to a single number known as your credit score or credit rating.
A quick note: Each company may have slightly different reports on you, as not all creditors report to all three agencies.
When it comes right down to it, it’s these three credit agencies that compile the information that lenders (and others) will use to determine if they will extend credit to you, and under what terms. Knowing this, it comes as no surprise that the “big three” wield a lot of power in the lives of US consumers. It’s in your best interest to get and keep as high of a credit score as possible with each of these agencies. Here are some things you can do to get your score higher and keep it there once you do.
At the top of the list is to pay all of your bills on time; at least by making the minimum payment (paying more is better, though). You should start doing this from the very first bill you pay, and continue doing so. If you slipped a bit in this regard, then you need to get back on track starting now. The longer you have re-established your ability to pay on time, the better. Each missed or late payment will count against you. The later it is, or the more bills you are behind on, the worse it is.
The next vital step to take when it comes to your credit score is to not spend more than you make. The tricky part is that credit cards make it so easy to live beyond our means, but that’s also the quickest way to get into trouble. However, as you are trying to show you are creditworthy, you can save up for the bulk of the purchase, and then pay most of it off as soon as the credit card bill comes. This will help show that you are good at repaying your debts, and that you are not overextending yourself.
Another thing you can do to protect your credit rating is to get copies of your credit reports on a regular basis. Check them over carefully and correct any and all errors you happen to find. There are many ways mistakes can be made, and it would be a shame to miss out on a good loan due to no fault of your own.