report provides information to current and prospective creditors to
help you make purchases, secure loans, pay for college educations
and manage your personal finances. Credit reporting makes it
possible for stores to accept your checks, banks to offer credit and
debit cards, businesses to market products, and corporations to
better manage their operations to benefit the world's economy.
report is only compiled when you or a lender makes an inquiry.
Information supplied by lenders, you and court records is gathered
from the credit reporting agency's file and presented in report
format for the requester.
send updates to each of the credit reporting agencies, usually once
a month. These updates include information about how their customers
use and pay their accounts.
Under the Fair
Credit Reporting Act, you may be entitled to receive a free copy of
your personal credit report if you have been declined credit,
housing or employment in the last 60 days. To request your free
copy, ask your mortgage company or contact one of the credit
reporting agencies directly.
Credit Scoring - How it Works
is a statistical method that lenders use to quickly and objectively
assess the credit risk of a loan applicant. The score is a number
that rates the likelihood you will pay back a loan. Scores range
from 350 (high risk) to 950 (low risk). There are a few types of
credit scores; the most widely used are FICO scores, which were
developed by Fair Isaac & Company, Inc. for each of the credit
only consider the information contained in your credit profile. They
do not consider your income, savings, down payment amount or
demographic factors like gender, race, nationality or marital
status. Past delinquencies, derogatory payment behavior, current
debt level, length of credit history, types of credit and number of
inquiries are all considered in credit scores. Your score considers
both positive and negative information in your credit report. Late
payments will lower your score, but establishing or reestablishing a
good track record of making payments on time will raise your score.
Different portions of your credit file are given different weights.
35% - Previous
credit performance (specific to your payment history)
30% - Current
level of indebtedness (current balance compared to high credit)
15% - Time
credit has been in use (opening date)
15% - Types of
credit available (installment loans, revolving and debit accounts)
5% - Pursuit
of new credit (number of inquiries)
important factor for a good credit score is paying your bills on
time. Even if the debt you owe is a small amount, it is crucial that
you make payments on time. In addition, you may want to keep
balances low on credit cards and other "revolving credit;" apply for
and open new credit accounts only as needed; and pay off debt rather
than moving it around. Also don't close unused cards as a short term
strategy to raise your score. Owing the same amount but having fewer
open accounts may lower your score.
minimize the negative effects that rate shopping can have on a
mortgage applicant. If there is a consumer originated inquiry within
the past 365 days from mortgage or auto related industries, these
inquiries are ignored for scoring purposes for the first 30 calendar
days; then, multiple inquiries within the next 14 days are counted
as one. Each inquiry will still appear on the credit report.
Every score is
accompanied by a maximum of four reason codes. Reason codes identify
the most significant reason that you did not score higher. The
reason codes can help a lender describe the reasons for higher than
expected rates or loan denial. Scores are not part of the credit
profile and are not covered by the Fair Credit Reporting Act.
report must contain at least one account which has been open for six
months or greater, and at least one account that has been updated in
the past six months for you to get a credit score. This ensures that
there is enough information in your report to generate an accurate
score. If you do not meet the minimum criteria for getting a score,
you may need to establish a credit history prior to applying for a
profile details your credit history as it has been reported to the
credit reporting agencies by lenders who have extended credit to
you. Your credit profile lists what types of credit you use, the
length of time your accounts have been open, and whether you've paid
your bills on time. It tells lenders how much credit you've used and
whether you're seeking new sources of credit.
Basically, it is
a picture of how you paid back the companies you have borrowed money
from and how you have met other financial obligations.
usually five categories of information on a credit profile:
There are many
items that are NOT included on your credit profile, Including:
Credit Reporting Agencies
Agencies collect information about you and your credit history from
public records, your creditors and other reliable sources. These
agencies make your credit history available to your current and
prospective creditors and employers as allowed by law. Credit
agencies do not grant or deny credit.
reporting agencies are:
information on credit please