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Your Credit History | Get a Free Credit Report | Your Credit Score
The Fundamentals of Credit
Credit is one of the easiest ways to buy now and pay later. You borrow money from a bank or other lender or creditor, and through a contract, agree to pay it back over a period of time. Usually an interest fee is involved for this service.
Today, you can buy just about anything with credit. Banks and other lenders make it so easy to obtain credit that abusing it can be easy. Therefore, the key to establishing and maintaining good credit is the key to ensuring strong long-term financial health.
Your Credit History
Your credit history begins the moment you apply for credit with a bank or other creditor. It is an ongoing record of much of your financial life. It encompasses all of the debt you incurred with creditors including banks, stores, student loans, mortgages, car loans, and also your employment history and past addresses.
More importantly, it tracks how you manage your debt, including late or missed payments and your debt-to-credit ratio.
Your credit history affects your credit and your financial future. Creditors determine your credit worthiness just by looking at your credit report to decide how much money they are willing to lend you, and at what interest rate and terms.
When the creditor agrees to lend you money, you are required to pay that money back, usually with interest, for the convenience of borrowing those funds.
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Your Credit Report
Each year, you are entitled to one free copy of your credit report from the three main credit reporting bureaus: Equifax, Experian and TransUnion. A fee is assessed for any additional inquiries. Each bureau uses different formatting and terminology. These inquiries do not affect your credit report or overall credit score.
Beware that anytime a lender requests a copy of your credit report, it is noted and recorded in your report for a year. Too many requests over a 12-month period can negatively impact your report and indicate to potential lenders that you are applying for too many credit cards or loans which could lead to you becoming financially over-extended.
Matters of Public Record
Official information regarding any liens currently open against you i.e., late or non-payment on your taxes, bankruptcies within the past 10 years, legal judgments filed against you, or child support judgments are also included in your credit report. This information can stay on your credit report for up to seven years.
What is Not In Your Report?
Your credit score is not included in your credit report although it is calculated based on the information included in your report. Information on your race, gender, ethnicity, religion, marital status, medical or criminal history, or political affiliation also is not included.
How to Get a Copy of Your Credit Report
Under the federal Fair and Accurate Credit Transaction Act, you are entitled to one free copy of your credit report annually from each of the three main credit bureaus. To obtain your free report, visit www.annualcreditreport.com, call 877-322-8228, or write to:
Annual Credit Report Request Services
P.O. Box 105281
Atlanta, GA 30348-5281
Three main, independent credit bureaus maintain your credit reports: Equifax, Experian and TransUnion.
Equifax Information Services
P.O. Box 740241
Atlanta, GA 30374
1-800-685-1111
www.equifax.com
Experian Consumer Assistance
(call for mailing address for your state)
1-888-397-3742
www.experian.com
TransUnion
P.O. Box 1000
Chester, PA 19022
1-800-888-4214
www.transunion.com
A 3-in-1 Report
A 3-in-1 report compiles all the credit information available on you from each of the three reporting companies into one document. Some credit card companies or other lenders use this report when deciding if you are a credit risk, so it can be a useful tool to review if you are applying for a particular loan or credit card. You generally must pay for a 3-in-1 report.
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Your Credit Score
Your credit score determines whether you will be approved for a loan or credit card. The different credit bureaus use a different mathematical formula that combines all of the information contained in your credit report and calculates it into one number – usually between 300 - 850. The higher your score, the less investment risk you pose to potential lenders or creditors. Although each credit bureau uses a different calculation, your scores may be within a few points of one another.
How Your Score is Calculated
A number of factors are taken into account when awarding or deducting points towards your score, including your bill-paying history; the number, type and longevity of your loans or credit cards; any collection actions taken against you; and how much total outstanding debt you may have. Late payments, tax liens or other outstanding legal judgments against you also affect your credit score.
Additionally, short credit history, too many high credit card balances (more than 50 percent maximum credit limit), too many new accounts opened in the past year, and too many inquiries on your credit report will affect your score.
Click here to find your credit score.
How to Improve Your Score
Low credit scores indicate to lenders and creditors that you are a risky investment. A lender or creditor will use your score to determine whether you will likely pay back a loan or default, and what level of card you may be eligible for and the type of interest rate you may qualify for. There are several ways you can improve your score:
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