Credit Score
A credit score is a numerical snapshot that indicates a person’s ability to repay money that they have borrowed. It is like your financial GPA which represents a person’s financial performance, a way for potential creditors, landlords, and employers to assess credit worthiness.
The most used credit score is FICO (Fair Isaac Corporation). The FICO score is calculated based on the financial information reported by three credit reporting agencies: Experian, Equifax, and Transunion. Scores range from highest (850) to lowest (300). A score below 600 is considered poor while a score above 720 is considered good. Understand your FICO score.
Your FICO score considers both positive and negative information from the credit reporting agencies. The percentage of the factors that influence the credit score is based upon five categories:
- Payment history
- Recent searches for credit
- Types of credit
- Length of payment history
- Ratio of debt to credit
Credit Report
A credit report is a detailed account of a person’s borrowing and repayment history. It is like a financial transcript. The Fair Credit Reporting ACT (FCRA) requires each of the three reporting agencies (Equifax, Experian, and TransUnion) to provide a free credit report upon request yearly. This means you can receive three credit reports, one from each agency every 12 months.
You can obtain a free credit report from Annual Credit Report or by phone at 1-877-322-8228. To receive your free credit report, you will need your name, address, social security number and date of birth.
Credit Recommendations
Below are recommendations related to your credit score, credit report and things to remember:
- Always make payments on time. Your payment history is 35% of your credit score so it has the greatest influence on your score.
- If you may have trouble paying a bill, call the service provider and let them know. In many cases, they may offer an extension or payment plan.
- If you cannot pay your credit card balance off in full each month, you are making too many purchases on your card.
- Accumulating a high balance, keeping a credit card inactive for too long or closing too many accounts at once can affect your credit score.