TransUnion is one of three national credit reporting agencies that maintain records about you. Each works independently to gather information from lenders and businesses to maintain and update your credit profile. A scoring system is used so that potential lenders, employers, insurers, landlords and others can evaluate your financial profile and determine your credit worthiness.

In general, the information collected to develop your financial profile includes:

Personal Information - This is basic information such as name, address, date of birth, employer, etc. It is not used in determining a credit rating; simply to identify you and validate the information collected is about you.

Account History - The credit accounts that have been taken out in your name and the details of each account including information such as account number, condition, balance, type and status for each account categorized as follows:

Real Estate - Mortgage loans on your home (both first and second mortgages if applicable)

Installment - Accounts that have fixed terms with regular payments, such as a car loan.

Revolving - Accounts with varying terms and payments, such as a credit card account.

Other - Accounts that don't fit in the above categories and could include 30-day accounts such as an American Express card.

Collection - Those accounts that are seriously past due and assigned to an attorney or collection agency.

Credit Inquiries - A list of businesses that have checked your credit in the last two years.

Public Information - Publicly available information about legal matters affecting your credit that may include tax liens, bankruptcy, etc.

This information is combined and, using an internal formula exclusive to TransUnion, a Personal Credit Score ranging from 300 to 850 is assigned. The higher the score, the better your chances of getting credit awarded with good interest rates. The lower the score, the less likely your chances are of getting a low interest rates or getting a loan at all.

So, what does all of this mean?
Credit ratings set a way for prospective lenders, landlords, even employers to rate responsibility and the likelihood that they will receive a return on their investment: you. They can also mean the difference between an 8% or an 18% loan - your hard earned money in your pocket, or someone else's pocket!
You work hard so you should reap the rewards. Diligence at managing your finances, paying your bills on time and keeping within budget will allow you to live the life you choose. If you have a less than satisfactory credit score, potential lenders may not have as much faith in your ability to pay for those rewards.

There are always waya to improve your credit ratings. Know what your credit scores are, what they mean, and immediately inquire about any discrepancies listed on your credit report. Get your yearly free credit report to start the process. From there, you can begin to understand where your strengths and opportunities to improve lie; then take control of their financial destiny.