What is a credit report?
A credit report contains your credit history, credit score, your employment information, social security number, birth date, and previous and current addresses. It will also list detailed information about late payments, types of credit, how many years you’ve had credit, settled or outstanding credit accounts, and open as well as closed accounts you’ve had.
Your score: what’s the big deal?
Your credit score is what determines whether or not you will be approved for loans and lines of credit. A credit limit or interest rate can be calculated based on how high or low your score is. Negative information stays on your record for 7 years, but good credit will remain.
Who might want to look at your credit?
These days, just about anybody running a background check on you might also run a credit history check - with or without your knowledge. This is important to know if you are trying to establish credit, clean up your score, obtain a job, buy a car or home, or start a new business. Banks, utility companies, and the like all have reason to verify the likelihood of your ability to make payments to them and do so on time each month. Credit checks don’t always hurt your score - and even if multiple checks are run in a short amount of time (like 5 the past week or 4 the past 2 months), they will be combined and considered as just one credit check. But did you know that there is only ONE type of credit check that will impact your credit score negatively? Applying for new credit will adversely affect your credit score! So keep what you have if you can - old accounts, though perhaps currently inactive, actually are what help keep your score in good standing. You don’t have to close an account just because you haven’t used it in a year or longer.
Tips:
- Improve your score by requesting a copy of your credit report annually, making sure the information contained is accurate, and that you remain from from identity theft. Being a victim of identity theft can ruin your credit without your knowing it until it’s too late!
- If you know your credit score is bad, stay away from applying for new lines of credit.
- Be consistent in your credit account payments.
- It is good to have at least one or two credit accounts, in order to maintain a positive credit history if you ever plan on purchasing a home or vehicle.
