What is credit exactly? Well credit and credit scores play a massive roll in your day to day life and may not even know it!!
From the well known things like; better interest rates and insurance premiums to the lesser know like; car rental and job background checks.
There is a lot of misleading information about credit and many people are under the impression that there is nothing they can do to fix their credit score.
We are here to educate you about credit so you won't be in the same situation again. Our main focus is to help you improve your credit score and maintain it.
Learning about your credit and how it affects you, and how to maintain it is the first step towards improving it.
So what is a credit report?
Your credit report is a collaboration of everything about your financial past and present.
Some things on your report include:
- Identification Information: Information such as the name of the individual, current and previous residential addresses, and Social Security number.
- Trade Line Information: Detailed information reported by creditors and other furnishers on each current and past loan, lease, or other debt.
- Public Record Information: Information derived from financial-related public records, such as records of bankruptcies, foreclosures, tax liens,
garnishments, and other civil judgments. - Collection Account Information: Information reported by collection agencies regarding credit accounts and other debts.
- Inquiry Information: Identities of individuals or companies that have requested information from an individual's credit file; the date of inquiry;
and an indication of whether the inquiry was by the consumer, for the review of an existing account, or to help the inquirer decide on a
potential future account or relationship.
Ok so now I know what's on a report. But how do they get a score from all of that?
Payment History (35%)
- Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, financecompany accounts, mortgage, etc.)
- Presence of adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
- Severity of delinquency (how long past due)
- Amount past due on delinquent accounts or collection items
- Time since (frequency of) past due items (delinquency), adverse public records (if any), or collection items (if any)
- Number of past due items on file
- Number of accounts paid as agreed
Debt Utilization (30%)
- Amount owing on accounts
- Amount owing on specific types of accounts
- Lack of a specific type of balance, in some cases
- Number of accounts with balances
- Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
- Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)
Length of Credit History (15%)
- Time since accounts opened
- Time since account activity
Types of Credit Currently in Use (10%)
- Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans,
mortgage, consumer finance accounts, etc.)
New Credit (10%)
- Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
- Number of recent credit inquiries
- Time since recent account opening(s), by type of account
- Time since credit inquiry(s)
- Re-establishment of positive credit history following past payment problems
Unfortunately, an alarming number of consumer credit reports contain serious errors and could cause the denial of credit, a loan, or a job, so monitor your credit report
to prevent future credit problems. Remember, keeping a 'clean' credit report is essential to your financial well-being.
So give us a call for your free consultation, and we will work with you to correct all those errors!!
