What is a credit report?
A credit report is a summary of your financial reliability -- for the most part, your history of paying debts and other bills. It is prepared by credit bureaus (also known as credit reporting agencies) primarily for use by lenders, employers and others who, under federal law, have a legitimate need for the information, such as when you apply for a loan, insurance policy, apartment or job. The wealth of information gathered by credit bureaus, coupled with the speed of today's computer systems, explains why consumers can quickly get loans and other services.
What is in my credit report?
In general, your credit report has four parts:
How do credit bureaus get their information?
Lenders voluntarily supply the information to credit bureaus on an ongoing basis; no federal laws require companies to submit the data. Having access to current and reliable information about you helps lenders make informed decisions and offer you financial products and services more quickly.
How can I get a copy of my report?
How often should I get my credit report?
Many financial advisors suggest that you review your credit report once a year. It's especially important to review your credit report before making a major purchase so you can correct an error before it slows down your credit approval or prevents you from getting the best possible loan terms.
What kinds of problems could I encounter?
While federal law requires lenders and other companies providing information to credit bureaus to give accurate information, mistakes do happen. So, when you look at your report:
How do I correct wrong or incomplete information in my credit report?
What if I have a question or complaint involving a credit bureau?
First, try to resolve the matter with the credit bureau directly. If you are not satisfied, contact the FTC. The FTC does not resolve individual disputes, but it does provide useful information that may help consumers resolve their problems. Visit them at www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357).
What is a credit score and why is it important?
A credit score is a number calculated by a credit bureau, a lender or another company for use in making a decision on a loan application or other product or service. Many lenders use a system developed by Fair Isaac and Company called the "FICO score". Think of credit scoring as a point system based on your credit history, designed to help predict how likely your are to repay a loan or make payments on time. Everyone with a credit record also has a credit score. Different lenders may use different scoring systems, so your score may vary significantly from one source to another.
In general, the better your credit score the better your chances are of getting a loan with an attractive interest rate. So when it comes to getting a good loan, it's important that your credit report - the basis for your credit score - is accurate, complete and in the best shape possible.
What are the most important factors in determining my credit score?
Typically, your credit score is most influenced by two factors: how you pay your debts and how much debt you owe. Late payments on loans, a past bankruptcy, debt collections or a court judgment ordering you to pay money as a result of a lawsuit will negatively affect your credit score.
Lenders want to be sure that the debt you owe is manageable. Lenders get concerned if you have a significant amount of debt compared to your income.
Other factors that can affect your credit score include how long you've used credit, how often you've applied for new credit and whether you've taken on new debt.
How can I get my credit scores?
Your scores, along with an explanation of how the score was derived, typically are available online for a fee. You may want to call or check the Web sites of any of the three major credit bureaus. Remember, your score may vary from one company to another.
For more information on credit scores, click here.
|Federal Trade Commission||www.ftc.gov||(877) 382-4357|
|Free Annual Credit Report||www.annualcreditreport.com||(877) 322-8228|
|My FICO Credit Education||www.myfico.com/crediteducation||(800) 319-4433|