Your Credit Report
Your credit report is a document that shows your personal and financial information, good and bad. Your credit score is
based on this information and is called your FICO score. The higher the FICO score, the better. This information is reported
by all three major credit bureaus: Equifax, Experian (formerly TRW), and TransUnion. Any time you apply for credit of any
kind, the lender will contact one of these credit bureaus for a copy of your credit report.
Since your credit score will also influence any financial decisions you may make, it is vitally important to keep track of
your score and to read your report regularly. Mistakes can be and are made regularly. Keeping track of your report will help
you to find these mistakes and resolve them in a timely manner.
What Your Credit Score Means
Your credit score will influence the decision a company makes when you apply for credit. If your credit is less than
perfect, you may be turned down; or if accepted, you'll be given a higher interest rate than someone with a higher score.
Problems can stay on your report for as long as 2 years, even after they have been resolved.
What Influences Your Score
Your payment history is one of the main influences. Have you paid your bills on time? If you have routinely been late with
payments, your score will be negatively affected.
How much outstanding debt you have is also a factor. This includes the outstanding balance on any loans you may have, as
well as the credit limits on any credit cards you may have. If you have multiple credit cards and these cards all have high
credit limits, this could negatively affect your score. Even if you don't carry a balance on these cards, the possibility
still exists that you will someday charge all these cards to their limits. This possibility alone will negatively affect your
credit score.
The length of your credit history is also a factor. Having no credit history can work against you. With nothing to go on,
the company has no way to judge how you will handle the credit you are seeking.
Obtaining Your Report
Since January of 2004, all credit bureaus are required to give you one copy of your credit report free each year. Although
the credit report is free, they can charge you for your FICO score. Contact any of the major credit bureaus either online or
by phone and see what their policy is.
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