Benefits of Credit Repair

A solid credit history can be one of your most useful and powerful financial assets. A record of prudent credit use and prompt payments can enable you to not only qualify for credit when you need it, but it may also enable you to get a lower interest rate on your borrowing.

There are three main credit agencies (TransUnion, Experian, and Equifax) that gather financial information on individuals and make that information available to lenders to help them determine whether to make a loan to someone. The information they compile includes a great deal of basic data such as age, Social Security number, current and previous addresses, employers, and marital status. They also get information on your borrowing history from places you have borrowed such as credit card issuers, mortgage lenders, and others. 

Your credit report probably includes all the credit relationships you have, the date they were established, your maximum allowed credit, current balances, and payment history. Indications of a solid credit history include some, but probably not extensive, borrowing, and regular, prompt payment of bills. Items that could hurt your credit report include bankruptcy, late payments, too many credit cards with balances close to the limit, and even too many applications for credit.

Lenders will use a credit report, along with evaluating your capacity to repay, your character, and any collateral in making decisions to lend you money. Many lenders also take these same issues into account when deciding what interest rate to charge or type of loan to offer. Credit card companies use credit reports extensively to determine what types of rates and fees to offer on different cards.