Learn more about your credit rating
Credit reports are necessary when making changes in your life: whether you are looking to move to a new apartment, start a new job, or hoping to make a big purchase, chances are you’ll have to bring a copy of your credit report to your prospective landlord or employer for inspection. Chances are, you don’t know nearly about this mysterious “credit report” as you’d like to. Fortunately, by educating yourself on the ins and outs of your credit score, you may be able to boost it.
So what, you ask, is a credit report? Creditors, insurers, employers and landlords may use credit reports when considering you for employment, home rental, insurance, or credit, in order to determine if you are financially responsible and stable. Credit reports are records of your credit activities, and include information about where you live, whether or not you pay your bills on time (a history of your borrowing and repaying), and whether you have been sued, arrested, or filed for bankruptcy in the past. A credit report will show if any action has been taken against you as a result of unpaid bills. In short, the four types of information on your credit report will usually include: identifying information, credit information, public record information (this includes state and county court records on bankruptcy), and recent inquiries (the names of those who have sought copies of your credit report).
A credit score is a figure—ranging from 300 to 850—that is based on previous habits that shows how likely you are to pay a bill back on time. The higher your score, the less risk you pose to potential lenders. Accordingly, your score is lowered whenever you make a late payment. If you have a score above 760, you would be charged much lower rates than, say, a consumer with a score below 600. An ideal score is one that is well above 620. The term “credit reputation” is often used synonymously with “credit history” or “credit score.”
If you are denied credit because of something in your report, you can request that the lender give you the name and address of the credit bureau that produced this report. You then have thirty days to request a free copy of this report.
If you are unhappy with your score, remember that a poor score will not haunt you for the rest of your life. Credit history information typically remains on your report for seven years (unless you have filed for personal bankruptcy, which remains on your credit report for ten years). Though the change is gradual, scores will definitely change as you continue to pay your bills on time and handle money responsibly. If you take steps toward improving your score, you will most certainly see the fruits of your labor.
Credit reports come from consumer reporting agencies, CRAs, which are companies that gather and sell credit information. Experian, Equifax, and TransUnion are the three major credit bureaus in the US that can provide you with your credit report and score. Because of the Fair Credit Reporting Act (FCRA), each of these companies are required, once every twelve months, to give you a free copy of your credit report. These are available online at www.annualcreditreport.com. For a fee, credit bureaus can provide your credit information to creditors who may grant you credit, employers considering you for employment or reassignment, insurers considering you for a policy, government agencies reviewing your financial status, or anybody else with business need for this information (such as a prospective landlord).