What is a credit score?
Your credit score is a number you are given based on your experience as a borrower of credit and also your current level of debt.
Why is my credit score important?
Your credit score is important because it is used by banks to determine whether you are someone they wish to make a loan to. The higher your score, the better, and the better rates and terms banks will offer you.
What affects my credit score?
Your credit score is affected by how well or poorly you have paid off debts and bills in the past, and whether you currently have a manageable level of debt.
What can I do to improve my credit score?
Improving your credit score over a short amount of time may be a challenge but here are some ways you can improve your credit score in the long run. Make sure you pay your bills on time. Reduce your credit-card balances. Do not apply for every card or line of credit you are offered. Having a high number of inquiries can negatively affect your credit score.
Where do I get a copy of my credit report?
There are 3 major credit reporting agencies, Equifax, Trans Union and Experian. You may contact any of these agencies and request a copy of your credit report.
You can also visit their websites to receive more information: Equifax, Trans Union, Experian.
There are also many resources on the internet that will provide you with a free credit report. Many of these companies may charge a fee to include your FICO score.
How do I read my Credit Bureau Report?
The following is an example of a credit report. Please follow along as we explain how to read your credit report and show you some important information you should look for when reviewing your credit report.
Consumer information: This section contains information about you. Your name, any addresses that you have lived and employment information. It is important to confirm that the information on your report is correct.
Consumer Statement: This information is anything you have submitted to the Credit Agency about your credit report. An example could be "The account for Bank A is my father's account".
Summary Information: This section summarizes information about the type of accounts and number of accounts you have. It also includes the number of payments you have made on each account, the number of delinquencies associated with an account and the number of current accounts. The account summary also summarizes the total number of accounts you have opened and closed, the number of public records showing on your credit report and the number of inquiries you have had over the past 2 years. There are 5 types of accounts that you may see in this section.
Collections Accounts, these are accounts that are severely past due and have been submitted to a collection agency to follow up on.
Installment accounts: These are accounts that have fixed repayment terms such as a car loan.
Other: These may include accounts where you are required to pay the full balance each month.
Revolving Accounts: These are accounts such as credit cards where the payments vary and the terms may change each month.
Real Estate Accounts: These will be your mortgage accounts on your home. The next section you will see on your credit report is your account history. You account history will include your Creditor name which is the name of the company who provided you with credit, Account number which is the number used to identify your account. Account type which would be one of the 5 types you would see on the summary page.
Condition: This is a detailed account of your payment status as of the last date the creditor reported it to the Credit Bureau agency.
Responsibility: If the account is a "Joint" account or "individual" account. This can sometimes be represented as a "J" or "i".
Pay Status: This is the status of the account meaning is it "open" or "closed".
Date Opened: This is the date your account was opened with your creditor.
Date Reported: this is the last date any account activity was reported by the creditor.
Balance Limit: The amount you owe on the account compared to your total credit limit.
Terms and Payments: The number of monthly payments and the amount you owe each month.
High Balance: This is the highest balance you have ever owed on a line of credit. Some examples could be car loans, mortgages etc...
Past Due: This indicates any amounts that are overdue as of the last date reported to the Credit Bureau Agency.
Remarks: This area contains any remarks made by your creditor or yourself.
Two Year Payment History: At the end of your account history information you will see a summary of your repayment history for the past two years.
Seven year payment history: This area contains information about any late payments that have occurred over the past seven years. The Public Record information section lists any public issues that may have affected your credit. This information includes items such as tax liens, bankruptcies and judgments against you or civil actions. The Type identifies the public record such as bankruptcy, civil action etc...
Status: This is the current status of the public record. For example if a bankruptcy has been discharged, it will be in this section.
How filed: This identifies if the public record was filed individually or a joint filing.
Reference number: The number that is used to identify the public record.
Closing/release date: The date the public record was closed.
Court: The agency or court that has jurisdiction over the record.
Amount: The amount of the public record. The next section the inquiry information lists details about any companies or creditors that have made a request for your credit report. The information will include the date of the inquiry, the name of the organization or creditor who made the inquiry. Requests for your credit report can only be made if you have authorized someone to do so. For example if you are applying for a credit card or loan you will have given the organization authorization to make an inquiry into your credit report. It is important to keep the number of inquiries minimal as it can negatively affect your credit score. The last section of your credit report lists CREDITOR INFORMATION. This information includes a list of all creditors that you have done business with and creditors that are listed in your inquiries. You will see the creditors name and address. On occasion there may be a phone number.
What is a FICO score?
FICO is a credit score that was developed by the Fair Isaac & Co. A FICO score provides creditors with information about an individual’s likelihood of paying back their debts. The higher the FICO score the less risk the individual poses for creditors.