Understanding Your Credit Score
Credit Reports and Scores: What Do They Mean?
If you have a credit card or have borrowed student loans or ever plan on borrowing or buying anything of substance, then you need to know the basics about your credit report and credit score.
What Is A Credit Report?
A credit report is a record of your history with borrowed money. The information is maintained quite meticulously by three main credit bureaus: Experian, Equifax and TransUnion. When you apply for credit, like you may have when you applied for student loans, the lender checks your credit report. Essentially your credit report tells a lender whether you are a reliable borrower.
The credit report contains information about your place of residence, your job and how and when you pay your bills. Other information such as whether you’ve filed bankruptcy in the past or have been sued may also be included.
Other information included in the report may be your current account balance on credit cards and loans, your credit limit and any records of delinquent or defaulted loan payments.
Know Your Credit Report
Did you know that you are privy to a free credit report from each of the major reporting bureaus annually? Contact them directly for a current copy of your free credit report. Its’ important that you know what activity has been reported. It’s one of the best ways to catch identity thieves. Contest any unauthorized activity you see.
What Is a Good Credit Score?
A credit score is like the numerical version of your credit report. It is basically a quick and easy way for creditors and lenders to see if you are creditworthy. Credit scores range from 300 to 850. The higher your score the better your creditworthiness.
What Is an Average Credit Score?
For United States borrowers the average FICO credit score is 692.
What Will A Low Credit Score Do to My Financial Situation?
The goal is not a low credit score. Unfortunately many lenders rely on the score as the determining factor to your borrowing power. Low credit scores can endanger your chances for any kind of credit, even qualifying for an apartment rental and certainly damages your opportunity for a mortgage.
Will A High Credit Score Do Benefit Me?
High credit scores are the goal. This means borrowing power. Lenders are eager to make loans to responsible borrowers—history has shown you’ll pay it back, with interest and on time. You can think of a high credit score as a merit badge. Learn how to improve your credit score today.