In the current times the buying power of the consumer is largely dependent on the amount of credit available to him. If you are like the majority of people you will need money on loan and credit in order to accomplish your lifelong goals. For example almost everyone purchases a home or a car by taking a lump sum of money on credit from a loan provider such as your bank. As the need for money has increased over time so has the demand and need for credit.
Lenders needed a reliable and stable system of determining the creditworthiness of an individual was required in order to make this process quick and risk proof. Having a national system of credit reporting has provided the creditors with the quick way of determining the credit worthiness of an individual. It has done away with complicated and tedious procedures that would require tons of paperwork to be filed every time you required money on credit or at least has managed to reduce it to a large extent.
You may or may not be aware of the fact, but credit reporting has existed in one form or the other for more than a century. In times when a formal or legal system was not in place, lenders still maintained records about their borrowers and shared them with other lenders who wanted to know how reliable a borrower was with paying back the money he borrowed. Gradually, some people made it their business to investigate and record the credit worthiness of consumers.
In fact, the system of credit reporting that exists today in the US, where 3 major credit reporting agencies, CRAs, do the majority of business, has been the result of mergers of hundreds of smaller credit reporting firms all over the nation. Even now, it is not uncommon to find a smaller credit reporting firm in a city or town that is in fact a subsidiary of one of the larger credit bureaus, Experian, Equifax and TransUnion.
A somewhat standard and unified credit reporting system, that is governed in many aspects of its operations by federal law, all across the country has enabled you to purchase homes, rent automobiles and shop using your credit card regardless of where you are situated. This would have been impossible without the presence of a credit reporting system. Your credit report and credit history speaks of your creditworthiness and responsibility with finances no matter where you go. Even while taking an apartment or a house or rent the landlords like to look into your credit history in order to determine whether you are a viable tenant or not.
Today, what your credit report has to say about is not only used when you apply for credit. It also comes in to reckoning when you apply for a job, are looking for a home rental, apply for utility services and also when you apply for insurance. (In certain states, using information in a credit report and credit score for evaluating the premium and approval for insurance is prohibited by law.)
A credit reporting system and you credit history enables you to carry your creditworthiness along with you no matter where you go. It speeds up any and all aspects of transactions and dealings that of a financial nature.
Since a majority of financial institutions rely on the same credit report for the purpose of extending you credit, this system fosters a healthy competition among the various financial services where one tries to out to the other in providing you with better interest rates and deals. Special benefits are offered to customers with a consistent and favorable credit history.