This is one of the most important topics for anyone looking for business or personal financing and I’ll do a couple of small pieces on this subject. First, some background:
There are companies that make a profit by gathering and selling information about your payment habits; these are called credit reporting agencies. The big three are Experian, Equifax and Transunion. People often think that these entities exist to help the us. That’s not true. These companies exist to make a profit by selling information about you to other companies. They sell the information so their buyers will consider granting you credit, try and sell you something, or to help them collect on your debts. Until you understand what your needs are and what the credit agencies agenda is, you are operating at a disadvantage.
They are gathering information about you – but it’s your information. So you have a responsibility to ensure that the information they gather about you is accurate. Dave Ramsey in his book Financial Peace http://www.daveramsey.com/bestsellers/home/ says that 52% of all credit reports have errors in them. If you don’t understand how that effects you, you lose.
It’s the tail and the dog theory. Someone’s going to do the waggin’ and someone gets wagged. If you don’t decide you’re the dog, then you’re automatically the tail.