1. What Is A Credit Report And Why Does It Matter?
Your credit report is a review of your financial history and your level of responsibility. It includes information about your payment histories on loans and debts. It also includes a summary of all your debts such as student loans, mortgages and credit cards and other lines of credit.
Lenders, landlords and employers are among those who can view your credit report. A good credit history can qualify you for low interest rates on loans and credit cards. A bad history may subject you to higher rates and may even prevent you from obtaining credit.
2. What Is A Good Credit Score?
Credit scores range from 300 to 850 and is a one-number reflection of your credit history. A high score says you’re a good investment and that you are likely to pay back your loans. A low score says you may not have the ability to repay debts or that paying them back is not the priority that it should be.
There is no specific cutoff for a good score or a bad one. Each lender can have specific guidelines about credit scores. Lenders requirements can vary, but the better the score the better the chance of obtaining credit.
For some lenders, individuals must have a score of 720 or 740 to receive the best interest rates and lowest fees. For others, the cutoff could be as low as 620.
Having a score lower than a lender’s top cutoff doesn’t necessarily mean you won't obtain credit, but it will likely result in higher interest rates. Some lenders may not approve you at all though if your score is very low.
3. How Do I Get A Copy Of My Credit Report?
Our two favorite options for requesting your credit report are the following:
Get your free credit score each month, and monitor your credit report at no cost. They will also send you daily monitoring alerts about changes to your credit report.
FICO® Scores are used in over 90% of lending decisions. myFICO gives you instant online access to your FICO® Scores most widely used in mortgage, auto and credit card lending.
4. Will Checking My Credit Report Lower My Credit Score And How Long Does Negative Information Remain On A Credit Report?
No. Credit reporting agencies understand the importance of you reviewing your credit history and other credit data, so you checking your report and score doesn't lower your score.
Most negative information (such as late payments) remains on your credit report for seven years. Some information remains longer. A lawsuit or unpaid judgment against you stays on your report until the statute of limitations runs out or for seven years, whichever period is longer.
A bankruptcy filing stays on the report for 10 years.
How can I improve my credit score?
Here are five basic recommendations for improving your credit score and keeping it high:
Check your credit report periodically and dispute anything you believe to be incorrect. Errors, inaccuracies and old information may be bringing down your score.
Pay your bills on time. If necessary, set up reminders so you remember to pay them on time every month. Contact your creditors directly if you’re having trouble making payments. They may be able to work out a payment plan with you. Contact them, even if you can't make a payment.
Decrease your debt. Rather than moving debt from one line of credit to another, focus on lowering the total amount you owe. This includes keeping credit card balances low, as higher balances can harm your score.
Don’t close old credit accounts. Long-established credit accounts can help your score.
Apply for new credit sparingly. Although it increases your total available credit, be sure you can actually afford the credit and it won't stretch your budget too far.