| Credit
Reports
and Credit Bureau
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Credit Reports
and Credit Bureaus
About, Why Check?,
Credit Report Monitoring
Services
About Credit
Reports
Credit Bureaus (Credit Rating
Agencies (CRA)) are
large private credit data gathering agencies. Their purpose is to
provide
financial information to issuers of certain types of debt obligations.
The financial information they provide about individuals (and
businesses)
is used to determine the credit worthiness of each person (or
business).
A persons (or businesses) credit worthiness is established according to
their financial history, the ability to pay back loans, and current
financial
obligations (current bills). The interpreted level of credit worthiness
is called a Credit Score. A higher credit score=higher credit
worthiness.
It is important to have a high credit score because this number is used
to determine if you qualify for loans and other dept obligations. Also,
this number (credit score) affects the interest rate applied to loans.
Those with higher credit scores are considered to be low risk and
receive
better interest rates than those with low credit scores (high risk
&
bad credit, or no credit rating at all).
What is a FICO score?
FICO score - is another name for Credit score. FICO
stands for Fair Isaac & Company …the actual company who pioneered
this mathematical calculation, during the late 1950s. FICO
scores are the credit scores most lenders use to determine your credit
risk. The better your score, the lower the risk to the lender, the
better chance you have to get a loan and at a lower interest rate.
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| About
Credit
Reports, Credit Ratings, and Credit Scores |
Credit Scores Range from
620 to 850. The
US average credit score is 678.
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Basic
Ratings (Credit Scores)
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| Excellent:
750-850 |
| Good: 660-749 |
| Fair: 620-659 |
| US average
credit score: 678 |
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| Some positive elements of
a credit profile |
| A positive credit report |
| A home with a mortgage |
| An American Express Card
and/or Diner's Club Card |
| A job held for a year or more |
| Current or paid off bank loan |
| A Visa or Mastercard |
| A department store credit card |
| A telephone in your name |
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| Other things which
contribute to your
credit score: Marital Status, Age, Monthly Income, Checking or savings
account, Monthly loan and credit card payments, Credit History,
Residence
(rent, own), and how long you lived at your previous residence. |
Your credit profile, will
determine how
easy or difficult it is to get bank loans, auto loans, personal loans,
credit cards or any other form of financing. Your profile can also
determine
what interest rates you pay, and in some, whether you get a job or able
to obtain a larger life insurance policy. Your credit profile with show
your prospective creditors a summary of your financial history on file
with the credit bureaus.
Ideally, your credit report is an
accurate,
up-to-date reflection of your credit history. However, since we don't
live
in an ideal world, there are many reasons that your credit report could
contain inaccuracies that might prevent you from receiving the credit
you
deserve. Therefore you should check your
credit
report regularly to spot and correct inaccurate information (79% of
credit reports contain errors).
Another increasingly important reason to check
your credit report is identity
theft
. You may not think it will happen to you but it does happens up to
500,000 people each year. If someone steals your credit card
information or personal information
and makes unauthorized purchases, it will not be long before these
unpaid
debts appear on your credit report. There are companies that can help
you
to repair and optimize your credit score.
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