WHAT IS A CREDIT REPORT?

Your credit report records payment histories and the amount of time accounts are open, requests for credit, results of legal proceedings and personal data.

WHO KEEPS TRACK OF MY CREDIT REPORT?

These three major credit reporting agencies use the following scoring models:

            Experian—FICO (Fair, Isaac and Company)
            Equifax—Beacon
            TransUnion—Empirica

WHAT IS A CREDIT SCORE?

Your credit score is a three-digit number and typically ranges from 350 to 850.

HOW IS MY CREDIT SCORE DETERMINED?

The score estimates a consumer’s willingness and ability to repay a debt based on previous behavior.  The less risk the creditor assumes, the better your rate and term options are. 

·         35% of your score is determined by your payment history including the number of accounts paid, and number and severity of delinquent accounts.

·         30% of your score is determined by the amounts you owe and how much of your credit line is in use, amounts you owe on installment accounts as compared to the original balances and number of zero balance accounts.

·         15% of your score is determined by the length of time of your credit history, total time of credit history as traced by the credit bureaus, and the length of time since accounts were opened.

·         10% of your score is based by new credit and the number of recent new accounts, the proportion of new accounts to existing accounts and the number of recent inquiries.

·         10% of your score is determined by other variables.

 
HOW DOES MY SCORE AFFECT MY RATE?

Creditors typically assign grades to scores and use these grades to determined interest rate and loan features.

·        An “A” paper allows creditors to offer the most competitive interest rates and the most creative and flexible loan terms.   

·        A “B” paper grade allows creditors to offer good interest rates as well as some creative financing. 

·        A “C” paper grade allows creditors to offer higher interest rates and less creative financing. 

·        A “D” paper grade allows creditors to offer the highest rates and the least creative financing.  

OTHER FACTORS THAT AFFECT RATE

·        Length of time at your current residence. 

·        Length of time at your current job/chosen field.

TYPES OF CREDIT REPORT INFORMATION

Personal
Your name and any aliases
Current and previous addresses
Social Security Number
Birth Date
Current and previous employers

Credit History
Name of the creditor and type of debt
Repayment history with each creditor
Credit limit for each creditor and highest balance
Whether the credit line is closed or open.

Public Records
Bankruptcies
Tax liens
Monetary judgments

Inquiries
Identifies who requested your credit report and when it was requested.

FACTORS AFFECTING YOUR SCORE

Inaccurate payment history information including payments are listed as late that were paid on time.

Debts you paid off that are still listed as outstanding.

Old debts (7+ years) such as collections and unpaid judgments should be removed from your report
after 7-10 years (depending on the type of debt.)

MANAGING YOUR CREDIT REPORT

Obtain a copy of your credit report and review it at least once every 12 months.   Contact one or more of the agencies listed below to request a copy of your credit report.

     Equifax:  800.685.1111 www.equifax.com
     TransUnion: 800.888.4213 www.transunion.com
      Experian:  8888.397.3742 www.experian.com

WHAT IF YOU FIND AN ERROR?

To protect your rights, report errors in writing.  After you’ve notified a credit-reporting agency of your dispute, by law they have 30 days to investigate.  If the credit-reporting agency can’t verify the information, it must be removed.

If the information is later determined to be accurate, it will be reinserted on your report.

Additional reports can be sent to companies you requested credit from within the last 6 months and any employer who has requested a report within the last 2 years.

EASY WAYS TO IMPROVE YOUR SCORE

Pay your bills on time.
Pay the full amount due on secured loans each month.
If you can’t pay the full amount due on secured loans, request to make an interest-only payment until you can make the full payment.
If your financial situation is serious, seek the advice of a reputable, non-profit credit counselor.

Learning how your credit score impacts your ability to purchase goods and services will help you make wise financial decisions regarding when and where to use your credit.

USEFUL LINKS

Annual Credit Report-Access to free credit reports from each credit bureau

My Fico-In-depth credit education

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