In terms of personal credit “The Big 3“ relates to the three credit bureaus which include; Equifax, Experian, and Transunion. These institutions are the primary source of credit reporting information used to determine your credit worthiness or ability to be approved for credit. These credit bureaus are independent organizations that get paid based on the information they receive from creditors (lenders) whether the information is good or bad.
For example, you go to a car dealership looking to purchase a new vehicle. After finding a car you like the car salesman says “let’s run your credit to see what loan you are approved for”. Once you give permission the car salesman uses a scoring model based on the information provided from “The Big 3” will generate a 3 digit number known as your “credit score” to determine if you are eligible for a car loan.
Now that you have an idea of how these three bureaus effect your ability to obtain a loan, you may be curious as to where they get the information to put on your credit report. In most cases the lending institution (car dealership, apartment complex, internet provider, etc.) works directly with one of the three credit bureaus to report any changes to your credit standing with the institution or inquiries for new credit.
If you still have questions on why credit is vital to your financial freedom please click here. If you are curious as to what information is on your credit reports please visit www.annualcreditreport.com in order to obtain a free copy of your report from each of “The big 3”.