Credit Reports & Scores
What is a Credit Report?
A Credit Report is a record of loan repayment. Financial institutions send information about the loans they make to the three nationwide credit reporting agencies (Experian, Equifax, and TransUnion also known as credit bureaus) to keep as a reference for future lending. A credit report is also called a credit history or credit profile.
Credit reports provide a very personal look into your financial world. They contain information such as:
- Identifying information (name, SSN, date of birth, address)
- Employers
- Creditors and payment history (positive and negative)
- Bankruptcies, judgments, liens, lawsuits
- Inquiries you initiated, such as loan and credit applications (not credit card solicitations)
This information is collected and updated regularly by the three credit bureaus. The information can bolster your credit standing or undermine it.
Each time you apply for a loan, the lender will check your credit report. As a consumer, you have certain rights to review your record and correct inaccuracies. Learn how to order a copy of your credit report.
Independent businesses such as Fair Isaac Company (FICO) and VantageScore develop proprietary credit scores that lenders use to assess the information in credit reports.
What is a Credit Score? What Does It Mean?
The credit industry is keeping score. Every time you apply for a credit card, a mortgage, insurance, or perhaps even a job, your application is judged in part by your credit score.
A credit score is a three-digit number that lenders use to objectively measure your creditworthiness. Each lender sets different ranges for what it considers "good" and "bad" credit scores. Consumers with lower credit scores often pay higher interest rates on mortgages and credit cards because they are viewed as riskier customers.
There are two commonly used scores: FICO and VantageScore. FICO scores range from 300 to 850, while Vantage scores range from 501 to 990.
Factors that affect your credit score include payment history, amount of debt you carry, length of credit history, whether you frequently apply for new credit, and your credit mix (credit cards, retail cards, mortgage, personal loans).
The best advice is to pay bills on time and only charge as much as you can afford to pay in full when the bill is due on credit cards and other revolving accounts.
You are entitled to one free credit report a year from each of the three credit reporting bureaus but not credit scores. You can order your credit score at myFICO.com, or from the individual bureau's websites, experian.com, equifax.com and transunion.com.
For help understanding your credit report:
