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Credit Reports and Credit Scores Credit Reports Your credit report should accurately represent your credit history. From the moment you first apply for a loan or a credit card, you likely have a credit history. It is wise to peridically check your credit report it make sure it doesn't contain any mistakes. One way to do this is to request a copy of your credit report every time you apply for a loan. You are entitled, by law, to receive a copy at no cost to you. Just tell the lender, you want a copy when you give him authorization to get your credit report. Credit-related transactions appear on your credit report, including your current debts, paid debts, and payment histories. Your credit report is compiled by three private companies: Equifax, Experian and TransUnion. These companies sell your credit report to banks and other creditors so they can review your past credit history. Your credit report includes:

• A list of debts and a history of how you've paid them.
  This can include credit cards, car loans, and student loans.
• Any bills referred to a collection agency.
  This can include phone and medical bills.
• Public record information.
  This can include tax liens and bankruptcies.
• Inquiries made about your creditworthiness.
  An inquiry is made when you apply for credit. Your credit report can also show if you were given credit based on the inquiry.

Adverse or derogatory credit information in your credit report is required to be deleted after 7 years (bankruptcy-related information is required to be deleted after 10 years). Your credit report is continuously updated, which is why you should always know what it looks like. In recent years, some unscrupulous creditors have not reported positive credit information on a timely basis. You want to make sure positive information is reflected accurately, so check your credit often. CreditReporting.com is one good way to find out what all 3 companies say about you.

Credit Scores

A credit score is a single number that helps lenders and others decide how likely you are to repay your debts. One common credit score is a FICO score. (FICO stands for Fair Isaac & Co. Credit, the company that developed the scoring method.) FICO scores range from 300 to 850 points.

When you apply for a morgage, your credit score is evaluated. Your credit score may also be a factor used to determine the morgage interest rate.

Your credit score is based on several types of information contained in your credit report:

• Your payment history.
  Late payments will decrease your credit score.
• The amount of debt you owe.
  If your credit cards are at their limits, this can lower your credit score - even if the amount you owe isn't large. Similarly, consolidating your debts onto one card can also lower your score.
• How long you've used credit.
  Your credit history is important. If you show a pattern of managing your credit wisely, keeping credit card balances low, and paying your bills on time, your credit score will be positively affected.
• How often you apply for new credit and take on new debt.
  If you've applied for several credit cards at the same time, your credit score can go down.
• The types of credit you currently use.
  This includes credit cards, retail accounts, installment loans, finance company accounts, and morgages.

Your credit score is only one factor in the credit decision. morgage lenders also look at your credit report, employment history, income, how much of your income goes to pay debt, and the value of the home you want to buy.