Your Credit Reports

A credit report is a record of your credit history which includes information such as:

-Your identity: name, address, date of birth, Social Security Number, and potentially employment information.

-Your existing credit: information pertaining to your credit history including revolving (credit cards) and installment accounts (student loans, car loans, mortgages…), how much you owe, and your payment history.

-Public records: Information regarding any judgments, tax liens, or bankruptcy in your credit history.

-Credit inquiries: List of companies or parties that recently requested a copy of your credit report for the purpose of lending.

Your credit report is used by lenders, insurers, employers, and others to assess your management of financial responsibilities.

-Lenders will use your reports to determine whether you will qualify for a loan, and what interest rate you will receive.

-Insurers can use them to approve or deny you for insurance coverage and to set your rates.

-Utility companies may use your credit report to determine whether they should provide you with their services.

-Employers, if given permission, may use credit reports in their hiring decision.

-Landlords may use the information on your credit report to determine whether they will rent to you or someone else.

Your information is collected by three major credit bureaus; Equifax, Experian, and Transunion. They gather the information that is contained in your credit reports, then provide the information to companies that request it to make the decision on whether to do business with you.

The credit bureaus have to manage all of this information on millions of Americans, so how accurate do you think all of the information is? Credit bureaus are not responsible for the accuracy of the information that they supply to lenders, that is your job!

Check your credit reports if you haven’t in awhile to make sure they are accurate, if they aren’t, contact us and we can get you started on the right path to achieve your goals.

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Each person’s credit situation is unique. Results may vary, and makes no guarantee of any particular result. The information in this site is intended for general informational purposes only, and is not to be construed as legal, tax, accounting, or other professional advice.  As such, it should not be used as, or relied upon, as a substitute for seeking professional legal, tax, accounting, or other advice. All information in this site is provided “as-is”, with no guarantee of completeness, accuracy, timeliness, or other results obtained from its use. In no event is, its Affiliates, or their agents or employees liable to you or anyone else for any decision made or action taken in reliance on the information in this site. “Affiliate” means any entity that directly or indirectly owns or controls, is owned or controlled by, or is under common ownership or common control of the party in question.

Focus On Your Credit Reports

1. You have multiple credit scores.
Most consumers are well aware that they have a credit score. What many don’t know is there are actually thousands of credit scores available. They are offered by various companies that use data to evaluate your financial  history and provide a risk assessment to lenders.

Don’t concern yourself too much with the exact number that you find as there is no guarantee that your lender will use the same numbers that you found. That being said, right around 90% of lenders use the FICO scoring model when making their lending decisions. Though they are not typically used for lending decisions, online scoring models can be useful in tracking your credit building progress and changes in your scores, but don’t put too much weight on the number that you see.

2. Focus on your credit reports, not your credit scores.
Your credit reports from Equifax, Experian, and TransUnion (the three major credit bureaus) contain the information that make up those various credit scores. So no matter what credit score you see, the information on your credit reports was used to calculate it. Taking advantage of your right to a free annual credit report is crucial as it allows you to ensure there are no mistakes on your credit reports. Verifying the information on your credit reports is accurate ensures that your credit scores are reflecting your financial history correctly so you aren’t being judged falsely when applying for credit.

3. Credit can affect employment opportunities, apartment rentals, and insurance.
Employers, landlords, and insurance providers may run a credit check for applicants. This means that your credit history can limit your employment and housing options, and determine the rates you pay for insurance. Consumer Reports released a study in July 2015 that found insurance rates on average tend to be higher for good drivers with bad credit, than bad drivers with good credit.

Bottom Line:
Your credit history plays a significant role in your financial life. Educate yourself on the information that is used to make these decisions, and get familiar with FICO scores, as they are the most commonly used of any credit scoring formula.

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