What Is This Report Called “Credit”?
Once you step into the adulthood, there’s a huge need for a job. Up to a certain age as a child and a youngster, you can depend on your parents. They will look after you and fulfil all your needs and wants to the best possible way. Without expecting back a single cent, every parent in this world would do anything to make their children happy. That is all what they want to see before exhaling the soul.
However, after your higher education you must start a job or a something of your own. May be a new business. Whatever it is, you have to always deal with money. Because we need money to live. But when we do a business or any financial transaction, we must be transparent to the parties who are involved. Let’s assume that you need an amount of $5000 to launch a new product in your company. What is the solution if you don’t have that much cash with you? You will have to get a loan. Is it easier to do that? No. You cannot just go to a bank or another financial institution and request for a loan. Before lending you money, they will check various things. Reliable business credit agencies is the document which they refer to have an idea about your status in terms of previous financial undertakings.
It is used by creditors before lending money to someone else. Banks, leasing companies or even an individual who gives money to others on credit basis, would go through this report. People who have good records will not be worried as they know it is good.
Moreover, these are maintained by background check agencies. They assign the rating for a debtor based on his/her ability to pay back the debts along with the interest payments. Another name would be credit bureaus.
Credit reports comprise of hundreds of data updated almost everyday which are collected from banks, credit card companies, auto lenders, department stores, mortgage companies etc. Basically it includes information such as the type of loans you have received, payment history, the frequency of applying for loans, how much money you owe at the moment, for how long you have had credit and so on.
Nevertheless, according to the above explanation it could be stated that credit reports play a huge role in the financial structure of a country although it is not given much importance. There are plenty of incorrect ways that even the reporting companies follow. Therefore, it is extremely vital that all of us should understand the necessity and the relevance of this to every business transaction we do.
Read more about credit reports, before you take money from someone else!