You always hear you need to face your fears. One way that’s often suggested is to learn as much as possible about what you’re frightened of; research can simplify and sometimes take away the unknown “scary” characteristics of your fear.
In the credit world, a common fear for consumers is their credit report and credit score; what’s included, how it’s calculated, and how that affects you in your day-to-day life. Let’s break down what’s included and help take some of the “scary” out of your credit report!
What’s Included In Your Credit Report
- Distinguishing Information: Name, Social Security number, addresses, date of birth, employment, etc. These are used to identify you but are not used to figure out your credit score.
- Credit Accounts & History: This section includes all accounts you’ve established, including type of account, date opened, the credit limit or amount along with balances, and your payment histories on each account. This section is what a significant portion of your credit score is based on.
- Credit Queries: This section shows when your credit is pulled. When you apply for any type of credit product, the lender will be pulling your credit report. Simply checking your credit report will not affect your score much; the biggest time that credit inquiries could affect your credit score is when there are multiple inquiries in a short period of time.
- Collections: The credit reporting agencies (TransUnion, Equifax, and Experian) gather information on late payments or overdue debt from collection agencies and also from public records, which includes bankruptcies, liens, and foreclosures.
How Your Score Is Calculated
Your score is calculated based on the information that you see in your credit report. The two main factors are the amounts you owe currently and your payment history – these two stats make up more than half of what is considered when figuring a score. Next, the bureaus will take into consideration length of your credit history, types of credit you’re using, and new accounts.
How This Information Can Affect Your Day-to-day Life
Your Credit Report and Score can have a great effect on certain aspects of your life. When applying for credit, whether it be an auto loan, a credit card, or a mortgage loan, your credit report is the main influence that lenders use to make credit decisions. Credit Report information can also be used by landlords when they are considering renting out their apartments to consumers or some utility companies are known to pull reports before setting up a payment schedule for their services – making it very important for you to keep your score in good standing!
If you haven’t checked your Credit Report recently or would like to keep a closer eye on your credit history, make sure to check out our Credit Reports page for some great options to make sure your report isn’t going to scare you next time you’re in need of credit!
Editorial Disclaimer: Information in these articles is brought to you by CreditSoup. Banks, issuers, and credit card companies mentioned in the articles do not endorse or guarantee, and are not responsible for, the contents of the articles. The information is accurate to the best of our knowledge when posted; however, all credit card information is presented without warranty. Please check the issuer’s website for the most current information.