The Reports
Every credit report may appear different, but there are fundamental similarities to each report you can get from the reporting agencies. Your name, address, date of birth, social security number, and employment information are used to identify you throughout all the types of credit inquires. This information is not used in determining your credit score. This information is only updated by yourself through lenders when you supply your information.

Most credit reports break down your credit into what are called "Trade Lines". These are credit accounts that are held in your name, such as credit cards, department store credit cards, car loans, home mortgages, and so on. Every lender reports on each account you have with them. They report the type of account , the date you opened the account, your credit limit or loan amount, the account balance and your payment history.

When you apply for a loan or credit line, you authorize your lender to ask for a copy of your credit report. These inquiries into your credit appear on your credit report in a section by themselves. The inquiries contains a list of everyone who accessed your credit report within the last two years. The report you see lists both "voluntary" inquiries by your own requests for credit, and "involuntary" inquires, such as when lenders order your report so as to make you a pre-approved credit offer in the mail.

The reporting agencies also collect information from public records. This information comes from state and county courts, and information on overdue debt from collection agencies. Public record information includes bankruptcies, foreclosures, suits, wage attachments, liens and judgments.

Credit Scoring
The most common method of credit rating is the "Credit Score". But you may be wondering what exactly is a "Credit Score". Credit scoring is a method of assessing the credit risk of an applicant. It is a mathematical representation of a person's credit based on past credit history, and current credit obligations. The three major credit bureaus (Experian, Equifax, and TransUnion) each developed their own scoring models based on one's credit data. This information is widely used by lenders and creditors when deciding on an applicants qualification of a loan, and the rate they may receive. However, your score is not the only factor that may come under consideration by the lender or creditor. Your salary and employment history are also important factors in the lending decision.

A credit score is a number that usually ranges from 300-900. The higher the number, the better your credit is considered to be. Credit scores are typically determined by the following information:

• Current level of debt, including credit cards, department store credit accounts, loans, and mortgages.
• Types of credit accounts held.
• Length of credit history
• Number of credit inquiries
• Credit application history
• Negative credit actions, such as bad check writing, late payments, and non-payments.

You may be wondering what is considered a good credit score. Each bureau has their own scoring system, as mentioned above. However, scoring from the bureaus are roughly close to each other. A score of 650 or above is typically considered a very good credit score. A score in this range will typically indicate very good credit standing, and will increase an applicants chance at receiving a loan with the best interest rates

Scores between 620-650 are considered good, but may also indicate potential trouble spots in one's credit that a lender may want to review. This may result in additional documentation from the applicant to the lender in order to qualify for a loan.

Scores below 620 are considered to be below good credit standing. A score in this range may result in a lengthy loan process. A score of 620 or below does not mean that you cannot obtain a loan, but it does indicate to lenders a greater risk of lending to an individual.

You are entitled to a free credit report from the three major credit reporting agencies annually. A service established by Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies to provide you with a free copy of your credit report, at your request, once every 12 months, from www.annualcreditreport.com. The Federal Trade Commission (FTC), the nation's consumer protection agency, has prepared a brochure, Your Access to Free Credit Reports, explaining your rights and how to order a free annual credit report.

Alternatively, you can request a copy of your credit by contacting the credit reporting agencies directly:

Equifax: (800) 685-1111, www.equifax.com

Experian: (888) 397-3742, www.experian.com

TransUnion: (800) 888-4213, www.transunion.com

Know Your Credit