There are three major credit bureaus (Equifax, TransUnion, and Experian) that maintain records about you that reflect your financial history. Think about that for a moment they are maintaining records on millions of people, where each person has and has had multiple credit experiences in the past. All of this adds up to billions of records that they need to keep straight. And it gets worse some lenders report only to one credit bureau, some report to two of them, and some (like your mortgage company for example) report to all three of them.
This is a booming business and it gets even more complicated. One lender may change which credit bureau they report to, as one starts giving better rates for reporting this information. What this all means to you is that there are almost certainly errors in your credit report! It is inevitable when a company is maintaining that many records. These errors do not get corrected automatically, but you need to take action to get the information corrected, otherwise it will continue to be misreported year after year, and will ultimately lower your credit report.
This massive gathering of financial data about your credit history is compiled to create a credit score for you. And yes, you have a different credit score at each credit bureau since they maintain different data on you. This score reflects your ability and willingness to meet your financial obligations. Why should you care? Because the better your credit score is, the better deal and more favorable terms you can get from a lender.
For example, I know of people who were paying 8.25% on their mortgage, and with a better credit score, they were approved for 5.75%. Over the course of several years, this loan by itself with a lower interest rate will save them several thousand dollars.
There are ads all over the Internet about credit repair companies, who all promise the world for a fee. You need to know that these are not necessary because these companies will not be doing anything that you cannot do yourself, once you know how the process works. What happens is that you can dispute information on your credit report, and if the credit bureau cannot verify or prove that that information is accurate, then the information must be removed. You would of course not want to dispute information that reflects positively on you, but you can and should dispute negative information.
You need to get a copy of your credit report from all three of the major credit bureaus. Since they are separate companies, the data they maintain on you is almost certainly different too. Then go over your credit report and look for anything that appears to be a negative comment. Look at it from the aspect of a lender who is looking to approve or deny a loan request or a new line of credit. When you find something (and you will), then your job starts as a campaign to start improving your credit score.
By: Jon Arnold