The Credit Report

The Credit Report and Score

Several factors contribute towards your credit score; these include your credit history, the length of time you have held credit, your outstanding debts, the number of inquiries made and the types of credit that you have.  Every year, a credit report is prepared with a credit score at the bottom. This could be from 350 to 800, and it varies from person to person depending on their consumer behavior.

The most important factor is your credit history, since it takes into account your financial activity over the past 7 to 10 years. During this time, you may have incurred late payments or filed for bankruptcy. If there are none, then you get a perfect score.

The second biggest chunk comes from any outstanding debts that you may have. This could be a loan that you applied for to pay for a house or a car. If this was paid for already, then that is good. A more recent loan could affect your credit score.

Half the percentage value of the second is the length of your credit. If you have had this for 5 years or more, then you are a better off than someone who is just building it.

The next ten percent comes from the number of times you have made inquiries about applying for a loan. If you have done this regularly, it tells creditors that you were turned down a lot in the past.

Last but not the least is the types of credit you have. If you have large credit, then good for you.

Experts consider that a good credit score is 700 or more. If you are able to reach this figure, you should be able to get a loan and repay it at a lower interest rate. People who are below this score will have to pay at a higher interest rate.

The good news about a credit report and score is that they do change. If you didn’t score well this year, you have a chance to improve on it next year. But you must first find out what is your credit score and see what brought it down.

If there were unpaid debts, these should be settled. Should there be any mistakes, do not just accept it but report it so this can be investigated and corrected. Being able to control your spending is the only way any one can have and maintain a good credit score.

For those who experiencing financial difficulties, there are people who can help. So don’t be afraid to get the assistance of financial advisers.   

The credit score is your final grade in a report. Although there is no passing or failing mark, there is a standard that creditors use to determine if your loan should be approved or not and at what interest rate will be followed.

The credit report offered by crediting agencies use varies. You will notice when you get a copy from the three - namely, Expedia, Equifax and Transunion - but they all say the same thing, and that is whether or not you are in good standing. You can get all these at the same time or after every few months. The best part is that it costs you nothing.