The method by which banks and other lenders decide whether you are worthy of credit can often be confusing. At the heart of it, though, it is very simple. Using credit bureaus, banks and money lenders assess statistical data to determine the health of your credit. You may not be aware of this, but every form of credit you have taken for the last several years is kept on file and used to build your credit score. The details of this data are used to build a profile of your overall ability to repay debts.



So who keeps this data? Well, there are several companies dedicated to compiling credit data on everyone who has ever taken a loan, credit card, mortgage or any of a number of forms of credit. The three main credit bureaus in the US are Experian, Trans Union and Equifax. These companies work with banks and lenders to accumulate your financial data and, using complex and secret methods, boil down this data to a single score. Using credit bureaus, banks and lenders purchase this score every time you apply for a form of credit so they can assess your most recent score.

You yourself can buy the same data from several sources on the Internet. For a little over $10 you can buy a complete credit report from one of the three main credit bureaus. Using this you can work out what sort of interest rates you could expect to be offered by a bank. As every credit application slightly hurts your credit score, it is best to know what sort of credit you would be accepted for, in order to avoid the damage of multiple applications.