What is a credit report?
Your credit payment history is recorded in a file maintained and sold by consumer reporting agencies, commonly called credit bureaus. The three nationwide bureaus are Equifax, Experian, and TransUnion. Lenders, landlords, insurers, and employers can request your report (with your permission, in most cases) to evaluate how you've handled credit in the past.
What information do the bureaus collect?
- Identification and employment information: your name, birth date, Social Security number, current and previous addresses, and employers
- Payment history: each account you've held, its credit limit or loan amount, current balance, and whether you've paid on time
- Inquiries: a record of who has requested your report, generally for the last two years
- Public records: bankruptcies, tax liens, and court judgments
How does credit scoring work?
A credit scoring model assigns points to the factors that best predict whether someone will repay a debt: payment history, amounts owed, length of credit history, new credit, and the mix of credit types. FICO scores, the most widely used in mortgage lending, range from 300 to 850. Higher is better.
Lenders use scores because they're fast, consistent, and reasonably reliable at predicting risk. A score doesn't consider your race, religion, national origin, gender, or marital status, which federal law prohibits.
Do I have a right to see my report?
Yes. Under the Fair Credit Reporting Act you're entitled to one free credit report every 12 months from each nationwide bureau through annualcreditreport.com. If you're denied credit, you can request a free copy from the bureau the lender used within 60 days.
How can I improve my score?
- Pay every bill on time. Payment history is the single largest factor.
- Pay down revolving balances, especially credit cards near their limits.
- Avoid opening new accounts or taking on new debt in the months before you apply.
- Check your reports for errors and dispute anything that's wrong.
- Keep older accounts open, since a longer history helps.
What if I'm denied or don't get the terms I want?
The lender must tell you the main reasons for the decision or that you can request them. If your credit report was a factor, you're entitled to a free copy so you can review it and dispute any inaccuracies. Our team is glad to look at your report with you and map out a plan to qualify.