Amazing Truth : Your Credit Score Revealed
For many of us, these two little words, “credit score” are shrouded in mystery, and sometimes even fear. It’s a fact that any professional who loans money holds these two words very near indeed, for the quality of your credit score determines if you can borrow money, how much and at which interest rate.
Your credit score can be found in your credit report (also known as your credit history), which is compiled mainly by three companies in the US., Experian, Equifax and TransUnion, also known as credit bureaus. Your credit report is a history of how you have borrowed money, and how you’ve paid it back.
All debts that you have (current and past) will be on your credit report, listed by who holds the debt and your history of paying on that debt. Some basic personal information is included such as your full name, social security number and current address (and some past addresses). Only facts are included in your credit report – there are no comments, etc.
Current loans, as well as paid off loans are included. Late payments – 30, 60 or 90 days late are shown for each current account. Debts held by collection agencies and bad debt charged off (debts that you never paid) are included as well, and all of this factors into making your credit score.
When most anyone is considering loaning you money – credit cards, auto loan or home mortgage – they will consult your credit report, and look closely at your credit score. Credit scores range from 300 to 850 points and look like this:
- 700 – 850 — Excellent or Very Good Credit
- 680 – 699 — Good Credit
- 620 – 679 — Okay or Average Credit
- 580 – 619 — Low Credit
- 500 – 580 — Poor Credit
- 300 – 499 — Bad Credit
The higher your credit score, the better the chance you’ll have borrowing money, and the lower your interest rate will be.
Where does the information for your credit report come from? Most creditors (i.e. Credit cards, banks, and others) report your credit history to the credit bureaus (see above) in return for credit information about other creditors. All accounts are updated on a monthly basis – creditor information is transmitted automatically to the credit bureaus, so your credit report is up to date.
You can order your credit report each year from one of the above credit bureaus – free of charge.
You can also challenge wrong information on your credit report – but this must be done by mail, and be fully documented.
Usually, information about you that is considered bad (debts sent to collection or charged off, lawsuits and judgments, paid tax liens and most criminal records should be purged after 7 years. Bankruptcies stay on your credit report for 10 years. Positive information and records of criminal convictions stay on your credit report forever.
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- Tags: Credit Score
November 20th, 2010 at 1:49 am
If you don’t mind i would love to include some references from this article on my website (I’d like to do a bit of a recap post of the material). Would this be okay?