Why Credit Reports Are a Good ThingFinancial transactions such as loans were handled much differently in years past than they are today. Banks were the primary source of loans and were often locally owned. Today’s banks are big business and are usually part of a much larger financial corporation than that located in one town or city. Also, there are many other options besides banks if you need credit.
In the Good Old Days
Years ago, when you needed credit you applied at a small town bank. Whether you got the loan often depended on your standing in the town or how well the bank owner knew you. And even if you were sound financially you ran the risk of not getting what you needed if your family was the town’s black sheep. But the flip side of this was that banks lent money to some people, because of their family’s standing in the town, who ended up being a bad risk - simply because they were able to hide their financial woes from the bank. So it was a 50/50 chance for both the creditor and the consumer.
Fair Play
Today things are more fair to both creditors and consumers. Now when you apply for credit you do not have to worry about what criteria the lender uses or whether or not you think he likes you. Personality, race, sex, age or creed has absolutely nothing to do with whether or not you receive the credit you are seeking. It is all based on your credit report and current financial situation. The creditor will look at both of these factors and then decide if he or she wants to extend you credit. You determine your own financial fate.
Benefits the Creditor
Credit reports also make things better for the creditor. Just because you walk into his office with a million dollar smile and sharp looking suit does not mean you are a good financial risk. But in the past the business had to rely only on your word. Now the creditor can look at the credit report and determine how much of a risk you are. Should you be extended credit, and if so, how much and at what rate of interest?
Good for Everyone
So in the long run, credit reports are a good thing for everyone. Those who have bad credit may not think so, but ultimately the responsibility lies with the consumer to maintain good credit. And in doing so, you reap the benefit of being able to receive the financial help you need, on good terms, when you need it.
|
