Credit Page/Report
What is a credit report?
A credit report is an ongoing record of your personal information and how you have paid your credit card debt and other bills. A credit report reveals how much debt you have, whether or not you have made your payments on time, or if you have neglected to pay off loans or credit cards completely.
What is a credit score?
A credit score is a number that is generated by analyzing your entire credit profile. Lenders use this number to estimate risk. Credit scores range from 340 to 850. The higher your score is the less risk the lender believes you will be.
How do credit-reporting companies calculate your score?
Credit-reporting companies generate your credit score by inputting data from your credit report into software that analyzes it and calculates a number. Credit scores are sometimes called FICO scores because the Fair Isaac Corporation (FICO) created the software used to calculate the number.
What elements are the most important factors of a credit history?
The chart below Illustrates the approximate value of each aspect of your credit report that is used to generate a credit score. These percentages should only be used as a guide:
- 35% - your payment history
- 30% - total amount owed
- 15% - length of credit history
- 10% - types of credit used
- 10% - new credit
Why are credit reports important?
It is very important to know exactly what your credit reports say about your financial history before you apply for any mortgage. Credit reports play a vital role in the mortgage approval process. It helps determine what your the mortgage interest rate is and any other offers the lender may give you. The content of your credit report may surprise you because errors are often found. That is why it is very important to verify that your credit report is accurate. Be sure to double check the high credit limit, total loan, and past due columns. If you haven't looked at your credit report, and you want to buy a home, now is the perfect time to do so! It's easy to obtain your Free Credit Report from All 3 Credit Bureaus when you try
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How to improve your credit report.
If a creditor has denied you a loan due to poor credit there are steps that you can take to improve your score. First you should request a written explanation from the lending institution that turned you down. This letter must explain the reasons you were turned down. Once you receive this letter you can begin to address the reasons why you were denied. You can also dispute any errors that you have found on your credit report.
How do I dispute errors on my credit report?
- Make a copy of your credit report and notate the items that you believe are incorrect.
- Write a letter to the reporting agency. Make sure that you explain every dispute and request an investigation to resolve the issues. Be sure to include any supporting paperwork that you may posses. Make sure that they are copies as you don't want to lose the originals.
- Be sure to send all materials by certified mail with a return of receipt request, so that you can prove that they received the letter.
- Send a second letter of dispute to the creditor that reported the statements that you disagree with.
After the reporting agency receives the letter they will initiate an investigation to verify the accuracy of the dispute. If the creditor cannot verify that the entry is correct, it must be removed. Once the investigation is complete the agency must send you a free copy of your credit report.
How are credit reports compiled?
National credit reporting agencies compile credit reports. Data is submitted to a credit agency by creditors, the court system, public records, and by debt collection agencies. Once a notation is made on your report it will remain on the report for seven years. Bankruptcy notations can remain on your credit report for ten years.
A typical credit report includes four types of information:
- Identifying information, which comes from your credit application. This includes your name, current address, previous addresses, your telephone number, Social Security number, Date of birth, and current, and previous employers.
- Credit history and current obligations, which is reported by the credit companies you do business with. This report includes specific details about your credit cards, student loans, and other loans. This information includes your payment history during the past several years, the date opened, credit limit or loan amount, balance, and monthly payments.
- Public record information, which comes from data collected from the court system and from debt collection agencies. This information includes bankruptcy records, foreclosures, and tax-liens for unpaid taxes, wage attachments, and monetary court judgments.
- Credit inquires include the names of those who have obtained a copy of your credit report and how often you have applied for credit in the past two years.
Creditors will rely on this information to determine how likely you are to repay a loan. Remember when you apply for a mortgage you are giving the lending institution permission to order your credit report from a credit-reporting agency. You need to know what is in it before you apply for a loan.
Tips for improving your credit
- Pay your bills on time
- If you have a past-due bill get current and stay current
- Contact your creditors as soon as you are experiencing a problem. Negotiate a payment arrangement.
- Pay your loans off first before spending on things like the movies or going out to dinner.
- Pay off your credit cards every month. If this is difficult to do, put the credit card away until you pay it off.
- Remind yourself that credit cards are loans
- Try to charge less then the maximum amount available on your credit cards.
- Don't close unused accounts. A zero balance could help your credit score.
- Only apply for the credit you need. Every time you apply for credit, it appears on your credit report.
- Choose credit cards with low interest rates and no annual fees.
- Try to pay more than the minimum due each month. When you pay the minimum you end up paying a lot of money in interest charges.
- Use your credit card to establish good credit. Use it wisely to prove that you can manage your credit.
- Look for ways to cut your expenses or increase your income. Make a budget and stick with it.
- Keep track of all of your bills and your past-due notices. Bills do not just disappear because you no longer receive notices.
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