Our Credit Report Explained!

by Kristina on September 1, 2011 · 0 comments

credit report, credit report explanation, credit explained

Credit is very important to our financial sustainability.  Our credit report is a measurement of our financial responsibility and our credit worthiness.  A good credit report can have a huge impact on our financial lives.  Our mortgage, our car loan, our home insurance and even our bank account being approved can all depend on our Credit Report.  Non financial aspects of our lives such as renting an apartment and getting a job can also depend on our Credit History and our Credit Report.

Our Credit Report is a history of our credit products and how we used them over the years.  Every single credit product that we have ever owned is listed on our credit report including Personal Loans, Student Loans, Lines of Credit, Mortgages, and Overdraft Protection.  Even if we have never used one of our approved credit product it will still be listed on our Credit Report.

Every product listed on Our Credit Report has specific details such as the Total Credit Limit, Our Current Balance, and The Highest Balance that we have ever held.  This shows potential creditors how we have used our credit in the past.  In general creditors like to see our Current Balance below half of the Total Credit Limit amount.

Not everyone who checks our Credit History wants to approve us for a credit product.  Many companies such as insurance companies and potential landlords or potential employers use our Credit Bureau as a way to confirm our identity.  Companies can cross check the information that we provide to them with the information on our Credit Bureau to confirm our legitimacy and our identity. This type of Credit Bureau check is for information purposes only; it does not impact our Credit Score in any way.

Our Credit Score

There are 3 Credit Bureaus in the United States which collect and maintain our credit information from financial institutions, finance companies, and other corporations.  Our credit information is sent on a monthly basis to Equifax, Experian, and Trans Union. They determine our Credit Score based on the amount of total credit we have open, our past credit usage and history, how often we apply for credit, as well as the current balances on our credit products.

Our Credit Score will be a fixed number between 300 and 850, with 300 being not so great and 850 being the best score possible.

How to Improve Our Credit Score

Keep our Personal Information Up To Date.  It is very important to update the Credit Bureaus every time we move or change employers.  This allows our personal information to be confirmed if ever it is checked by a company or corporation.

When we order a copy of our Personal Credit Bureau file it comes complete with our Credit History, our Current Credit Products, as well as tips on how to Improve Our Credit Score.  The two major activities that negatively affect our Credit Score are late payments, and high balances on our Credit Cards and other Credit Products.  It is important to ensure that we always make at least the minimum monthly payment on each of our Credit Products. FICO offers great tips on how to understand and improve our credit score.

Equifax allows users to receive their Credit Report from all 3 Credit Bureaus for Free.  Our Credit Report includes our personal information, our current and closed Credit Products, as well as who has checked our Credit Bureau in the Past.  Our Credit Report does not show our Personal Credit Score. We can purchase our individual Credit Score for $15.95.

Prevent Identity Theft and Fraud

I order a Copy of my Credit Report once a year to make sure the information is up to date and to make sure that my credit history is being reported properly.

If you find incorrect personal information on your Credit Report I suggest that you contact Equifax immediately.  If some financial information is not showing correctly on your credit report I suggest that you contact the corresponding financial institution or finance company as soon as possible to correct the mistake.  They will then report the correct information to the Credit Bureaus next month.

I have also signed up for a Credit Alert service that advises me every time someone checks my Credit Bureau and every time someone applies for credit in my name.  Equifax contacts me and I must confirm the Credit Check or Credit Application is legitimate before they proceed and release my personal information.  This Credit Alert service definitely helps to detect and prevent Identity Theft and Fraud.

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