6 Things To Know About Your Credit

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Whether you are a millennial just starting to think of possibly applying for a loan, or if you are a baby boomer getting ready to refinance your 3rd house, its always good to keep track of what is going on with your credit and your credit score.  Here are some quick highlights as to why it is so important and how you can monitor one of your most important assets.

Credit Report Purpose

  • Provides a history of your credit use to prospective lenders
  • Allows lenders to assess risk of extending credit to you
  • Used for all forms of credit, including apartment rental, credit cards, student loans, car & home loans, etc.

Establishing Credit

  • Apply for credit card with a reasonable limit
  • Buy something for approx. $100, and pay back in 2 months
  • Do it again, and make sure to pay on time!
  • 4 trade lines will be needed to obtain a mortgage
  • 12 months of activity are needed to develop credit history

What Information is Included in a Credit Report?

  • Personal Info: name, address, date of birth, employer
  • Credit Account History: credit card company/lender, type of account, credit limit, balance, payment history
  • Public Records: bankruptcy, tax liens, and judgments
  • Credit Inquiries: creditor and date of inquiry

What is a Credit Score

Summary of credit report info represented as a single number, based on a mathematical calculation
  • FICO (Fair, Isaac, & Co.) most common score type
  • FICO scores range from 300 – 850; the higher the better
  • Predict future payment history for creditors
  • Scores are “fluid” – recalculated each inquiry

Credit Score Factors 

  • Payment History: 35%
  • Amount Owned: 30%
  • Length of Credit History: 15%
  • New Credit: 10%
  • Type of Credit Used: 10%

Image result for my fico credit score

Getting Credit Reports

There are 3 credit bureaus and each has a credit score for you (scores may be different)
  • Equifax 800-685-1111 or www.equifax.com
  • Experian 888-397-3742 or www.experian.com
  • TransUnion 800-888-4213 or www.transunion.com

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