Credit reports list your loans, current debt, bill payment history, and previous debt and other financial information. The reports show where you live and work and whether you have been arrested, sued, filed for bankruptcy, or have garnishment.
Credit reports help creditors, lenders, and bankers decide if they will lend you credit or approve you for a loan. The reports can also be used to help determine the interest rate they may charge you. In addition to creditors, insurers, employers, and rental property companies could also look at your credit report. You won't know which credit report an employer or creditor will use to check your credit history.
Most credit reporting agencies collect and maintain information for your credit reports. Each credit reporting agency manages its own reports and records, and they might not have information about all of your accounts. Not all creditors report to all agencies. Although you may experience some differences between their reports, there is not one agency more important than the other. The one thing that is the same between each agency is the information they have in your record must be 100% accurate about you.
It's imperative to check your credit reports on a regular basis to ensure that your financial and personal information about you is 100% error-free. It will also help to ensure nobody has opened any fraudulent accounts or credit cards in your name. If you locate any errors in your credit report, you should take immediate action and request the credit reporting agency correct the information.
A credit score, also called FICO score, is a number that rates your creditworthiness or credit risk. It helps creditors to determine whether or not to extend you credit, the interest rate you pay and the terms they offer you. Having a higher credit score will benefit you in so many ways. For starters, it can make it easier and quicker for you to obtain a loan, get the loan amount you need, lower insurance rates, or rent an apartment.
Some people are unaware that the information in your credit report is used by the credit reporting agencies to calculate your credit score. How is your credit and FICO SCORE calculated?
· Payment History 35% - Have you've paid your bills on time
· Amounts owed 30% - How much credit and how many loans you have
· Length of Credit History 15% - How long you've had credit
· Types of Credit 10% - Types of credit you've had (e.g., mortgage, auto loan, credit cards)
· New Credit 10% - Frequency of credit inquiries and new account openings
It's essential to make sure your credit report is accurate, so your credit score can be calculated corrected. You can have multiple credit scores. Your credit score is not calculated by the same credit reporting agencies that maintain your credit reports. Instead, your credit score is created by different companies or lenders. These companies use their own credit scoring system to calculate a credit score.
Schedule your free consultation today to discuss your credit and financial goals.
The Financial Act
9375 E Shea Blvd, Suite 100, Scottsdale, AZ 85260