You credit report is a digital file that holds complete records of any type of debt you have. It records things like missed car payments, repossessions, credit card outstanding balances, court-ordered judgments, mortgage defaults, debt collection agency accounts, and other types of debt. Anyone with a United States issued social security number has a credit report on file with the three major credit bureaus. The credit bureaus, (Experian, Trans Union, and Equifax) are the keepers of this file. Anytime you borrow money and do not pay it back on time, or not at all, the company that you borrowed it from contacts the 3 credit bureaus and files the outstanding account in your credit report.

Items can stay on your credit report for up to 10 years, and even then, some of them remain. Lenders will go out of their way to make sure the debt you incur to them is reported to the credit bureaus, and that is because they rely a great deal on the integrity of the credit report. Anytime you want to borrow money, a lender will run your name and retrieve your credit score, this credit score is a numerical interpretation of your entire credit report, it is a rating. Depending on what type of loan you need, your credit score needs to be at least 500.

The lenders do not take your word for it that you are going to pay them back and on time. They use your credit score to make that decision, and the logic is rational. If you have a low credit score, it means you have had problems paying your bills, regardless of the reason. This is all a lender needs to know in order to decline you for a loan. As you might imagine, bad credit rating can keep you from getting many things in life. Cars, houses, school loans, credit cards, and even car rentals all require a good credit rating to acquire.

Thankfully, there are ways to improve your credit, but it does not happen overnight. Anyone who tells you that it does is trying to sell you something, and it is a pack of lies. It takes years to get debts removed from your credit report, even when you pay them off! Of course, the best thing to do is pay your bills and never default on any loan, ever. Many people have bad credit, and a lot of them ruined it when they were young. Credit card companies love to give young people credit cards, because they have a tendency to run the balance up all the way to the max. Then when they run the card up to the limit, they have no choice but to make payments on the balance since they do not have the principal. Most of these payments cover interest and barely any of the principal. The credit card companies do this on purpose, and ruin young people’s financial security before they even get out of college.

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