What is a credit report and what do I need to know? A credit report is a report on an individual about their personal information, credit history and any public records about them. There are three different credit reporting agencies out there; they are Equifax, TransUnion and Experian. Each of these reporting agencies maintain a credit report of you and your records. Most of the information on these reports are very similar to each other but in in most cases they will have different information on them and thus will result in differences in scores. With the information gathered on your characteristics these company will rate and assign you a FICO score. What is a FICO score? The FICO scoring system was developed by Fair Isaac Corporation to determined the credit worthiness of individuals. These scores are use by lenders and many other organizations out there to determine whether or not to do business with an individual.
Before we go into the FICO scoring system let first examine what is in your credit report. Your credit report will have your personal information, your credit history, inquiries and also any public records about you. Here is a brief break down of what is in each:
- Personal data: name, birth date, social security number, current and past addresses you were at and current and past employers.
- Credit history of all your accounts you hold will contain the account established date, credit limits or loan amount, on time payment history, payment terms and balances if any
- Inquiries made by lenders, landlords, insures or any other organization will be on your report which will take a hit to your score
- Public records such as liens, bankruptcies, or any other public reporting will also be on your credit report.
The FICO scoring system ranges from 300 to 850; 300 being very bad and 850 excellent. There are five categories in which your FICO score is based on; they are
- Payment History which accounts for 35% of your FICO score
- Amount you owed will account for about 30% of your FICO score
- Credit history length will account for 15% of your FICO score
- New credit for roughly 10% of the FICO score
- Type of credit used will count for 10% of the FICO score
Below you will find a break down of what a good FICO is and what the ranges are:
- 620 and below: subprime
- 620-679 with this score you can get a loan but with higher interest rates
- 680-679 you can qualify for good rates for secure loans
- 720-779 can qualify you for a special exception programs
- 780+ is excellent and is all lender’s dream
It is always a good idea to know what is on your credit report and what others are putting on it. A lot of times you will be surprise to find what is being put on there. If anything is incorrect it is always a good idea to get it fixed immediately. Identity theft is also a common problem people are facing these day, so monitoring it is also great idea.
To obtain a report from the 3 major reporting agencies you can either call or visit their website.
- Equifax 1-877-576-5734 www.equifax.com
- Experian 1-888-397-3742 www.experian.com
- TransUnion 1-800-680-7289 www.transunion.com
Did you know that you can get a free report once a year from www.annualcreditreport.com? Remember to always check your credit and keep it in good standing because a bad FICO score can cost you hundreds if not thousands of dollars down the road. I hope the information on this post helps you to better understand about your credit a little better. Please feel free to leave your comments and feedback. Thanks.
