Your credit score is issued based on an accumulation of data. Credit reporting companies will look at your borrowing habits and assign you a numerical score based on debt levels, income, past repayment issues, bankruptcy cases and a variety of other factors.
Having a high credit score, then, is very important for borrowers. The higher the score, the easier it is to secure financing. A high credit score may also give someone access to lower interest rates.
Because of this importance, people often think of credit scores as an inherent part of the financial industry in the United States. And they are today, but it hasn’t always been that way. In fact, the first FICO credit scores were put out in 1989. They’re a fairly recent development.
Credit reporting did happen before credit scores
One thing to note, of course, is that credit reporting itself is not new. There are records of credit reporting going back centuries. What credit scores do, though, is to consolidate the process. Credit reporting companies gather information from numerous sources and combine all of it into a singular score that makes it easy to determine a person’s credit rating. Before, lenders would have needed more complex records in order to look at a person’s financial past.
But this also means that it is incredibly important for credit scores to be accurate. What if the credit reporting agency lowers your score based on false or inaccurate information? What type of harm is that going to cause as you try to get business loans or mortgage loans? If you feel that there are serious issues with your credit score and related details, it is imperative that you know what legal steps to take.
