Your Credit Report And Credit Score

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Your credit report is a month-by-month record of your debt payment history with financial institutions or credit card issuers (companies that grant credit). It shows how much credit you are using, how well you pay your debts, who is inquiring about your credit and information on bankruptcies or federal income tax liens.

Your Credit Score

Credit scores range from approximately 300 to 850. The higher your score, the better. Most lenders consider scores above 700 good credit risks, while scores below 620 may indicate credit problems. A low score may cause you to be denied credit. With a slightly higher score you could get credit but at a higher interest rate. If your score is high enough, you may qualify for the best rate on a loan or credit account.

When you request your credit report, you should always request your credit score, as well — even though there is a fee. Currently, fees range from $9 to $20.

Scores take five factors into consideration. No single piece of information determines your score. But one or more of the factors may affect the final score more significantly than others depending on the overall information in your credit report. Your score can also change as new information is received by credit reporting agencies. Your score today could be different than the score you have 3 months from now.

Order A Free Credit Report

You are entitled to a free credit report at anytime if you have been denied credit, are a victim of identity theft, receive welfare benefits or are unemployed but expect to apply for employment in the next 60 days.

A poor credit report could mean you will be denied a loan or credit card or incur higher interest rates. You could also be turned down for insurance, an apartment or even a job. Review your credit report at least once each year to ensure it is accurate and that you are not the victim of identity theft. It is also important to check your credit report before you apply for a mortgage or other major loan.

You can request your free annual credit report online at www.annualcreditreport.com or by contacting the agencies individually.

The Four Cs Of Credit

1. Capacity: Your ability to repay credit.
2. Collateral: Your personal property, such as a bank account or vehicle, that provides the creditor with security if you cannot repay your debt.
3. Character: Your ability to use credit responsibly (your debt-to-income ratio).
4. Creditworthiness: Your credit history (how you have managed money in the past).

Your Credit Rights

• Provide you with a complete credit report. You are entitled to a free credit report anytime from any of the agencies if you have been denied credit, are a victim of identity theft, receive welfare benefits or are unemployed but expect to apply for employment in the next 60 days. You can request a free credit report annually.
• Investigate, at your request, erroneous or missing information in your report. The credit bureau must provide you with a written report of the investigation, as well as a revised copy of your credit report if the investigation resulted in changes.
• Keep your credit report information from anyone other than legitimate users of the credit reporting agency.
• Remove detrimental credit information from your file after 7 years. Bankruptcy information can be removed after 7 to 10 years.

• Understand the entries on the credit report. Each credit reporting agency’s credit report contains information such as how long an account has been tracked, the highest amount charged, the account balance at the time of the report and the type of account.
  Other entries identify creditors that have viewed your credit history. Codes indicate debtors’ arrangements, repossessions and bad debts, if applicable.
• Ensure the credit report is accurate. Common errors include incorrect personal information, missing information and failing to correct damaging information after problems are resolved.
• Take action to correct errors. Document your actions and follow up until the problem is resolved.
• Inform creditors when errors are identified. The credit reporting agency must investigate the items in question — usually within 30 days — unless they consider the dispute to clearly lack merit.
• Retain your written account of errors or discrepancies in your file. If an investigation does not resolve the dispute to your satisfaction, you have a right to add a statement to your credit report file contesting the accuracy or completeness of the disputed information.