Understanding Credit Reports and Scores

FICO is the most well-known company that will calculate a person’s credit score. Your credit score gives lenders an idea of how risky it would be to lend you money, rent or sell you property. Don’t pay for your credit scores! Credit Karma is a site where you can access your credit scores for free.

A credit score of 750-850 is considered excellent. When you have an excellent credit score, you get premium interest and insurance rates.

Lenders and landlords look at your credit score to determine whether you are creditworthy. We depend on credit for important things such as buying a car, house, computer or getting a private student loan.

It may take about 6 months to establish a credit history and get a FICO score once you open your first credit account. As your FICO score improves, better rates and opportunities may become available to you.

• Only apply for credit that you need
• Always pay your bills on time as late payments will lower your FICO Score
• Establish a good track record of making timely payments

• Personal information section: Name, Social Security Number, address and birthdate. Items in this section will not impact your score.
• Public records: Bankruptcies, legal judgements, state and federal tax liens
• Collections: Accounts that have not been paid and have been sold to a collection agency
• Credit inquiries: There are two types of credit inquiries. Hard inquiries lower your credit score and generally occur when a financial institution checks your credit. Soft inquiries occur when a person or company checks your credit report as part of a background check. Soft inquiries don’t affect your credit score.
• Credit account information: Lenders report the types (credit card, auto loan, mortgage, etc.), the number of accounts, the date you opened the account, your credit limit or loan amount, the account balance, and your payment history.