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This central site allows you to request a free credit file disclosure, commonly called a credit report, once every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion.
PrivacyGuard offers a comprehensive credit and identity theft protection plan, but only refresh credit every 90 days.
Equifax is one of the main credit bureaus as well as a well-respected and established provider of consumer credit services. Equifax provides consumers with a wide range of credit monitoring services. Equifax also offers a plan for consumers who are looking to monitor their credit score, and there are several options for those who simply want to receive access to their credit reports and scores.
Managing your credit is not difficult, it just takes time and little knowledge about the credit scoring system. While each person’s individual credit profile should be managed in its own way, there are five basic things that everyone can use to work towards having a stronger credit report:
1. Be punctual –
Pay all your bills on time each month. Late payments, collections, and bankruptcies have the greatest negative effect on your credit scores.
2. Check your credit reports regularly and take the necessary steps to remove inaccuracies –
Don’t let your credit strength suffer due to inaccurate information. If you find an inaccuracy on your credit report ask us for more information about our customized 6-month program.
3. Manage your debts –
Keep your credit card account balances below 35% of your available credit limits. For instance, if you have a credit card with a $1,000 limit, you should try to keep the balance owed below $350.
4. Give yourself time –
Time is one of the most significant factors that can build healthy credit. Establishing a long history of paying your bills on time and using credit responsibly is essential in obtaining an excellent credit rating. You may also want to keep the oldest account on your credit report open in order to lengthen your period of active credit use.
5. Avoid excessive inquiries –
A large number of inquiries occurred over a short period of time may be interpreted as a sign that you are opening numerous credit accounts due to financial difficulties or overextending yourself by taking on more debt than you can easily repay. Apply for new credit in moderation.
In general, credit scores do not change that much over time.
But it’s important to note that your credit score is calculated each time it’s requested; either by you or a lender. And each time it’s calculated it’s taking into consideration the information that is on your credit report at that particular time. So, as the information on your credit report changes, your credit score can also change. How much your credit score changes from time to time is driven by a variety of factors such as:
Your current credit profile
How you have managed your credit to date will affect how a particular action may impact your score. For example, new information on your credit report, such as opening a new credit account, is more likely to have a larger impact for someone with a limited credit history as compared to someone with a very full credit history.
The change being reported
The “degree” of change being reported will have an impact. For example, if someone who usually pays bills on-time continues to do so (a positive action) then there will likely be only a small impact on their score one month later. On the other hand, if this same person files for bankruptcy or misses a payment, then there will most likely be a substantial impact on their score one month later.
How quickly information is updated
There is sometimes a lag between when you perform an action (like paying off your credit card balance in full) and when it is reported by the creditor to the credit bureau. It’s only when the credit bureau has the updated information that it will have an effect on your credit score.
Keep in mind: Small changes in your score can be important if you’re looking to obtain a certain credit score level or if you are striving to reach a certain lender’s credit score “cutoff” (the point above which a lender would accept a new application for credit, but below which, the credit application would be denied).
Public records are legal documents created and maintained by Federal and local governments, which are usually accessible to the public.
When you are taken to small claims court and a judge makes a ruling against you, this judgment is considered a public record. Some public records, such as divorces, are not considered by your credit score, but adverse public records, which include bankruptcies, judgments and tax liens, are considered by your credit score.
Your score can be affected by the mere presence of an adverse public record, whether it is paid or not. Adverse public records will have less affect on your credit score as time passes, but they can remain on your credit report for up to 10 years based on what type of public record it is.
Judgments specifically remain on your credit report for 7 years from the date filed.
Judgments will almost always have a negative effect, if not directly to your credit score, then to your general stress level when you receive a formal court appearance letter and then have to deal with going to court.
Before letting a bill or credit obligation get to the courthouse, see if there is an alternative that might work. Reach out to the person or company that you owe money to and see if some sort of arrangement can be worked out.
If you are dealing with a collection agency or other company, they may be willing to work out a settlement with you that is equitable as it’s almost always more efficient for them to work with you directly than through the courts.
Your credit score is an important indicator of your financial health. Lenders use your credit score to determine:
While your credit score is a key determinant of your creditworthiness, lenders also examine the information on your credit reports and your loan application. Regularly checking your credit reports enables you to:
A foreclosure or repossession will remain on your credit report for 7 years, but its impact to your credit score will lessen over time.
While both of these are considered an extreme negative on your credit report, it’s a common misconception that it will ruin your score for a very long time. In fact, if you keep all of your other credit obligations in good standing, your credit score can begin to rebound in as little as 2-3 years.
The important thing to keep in mind is that a foreclosure or repossession is a single negative item, and if you keep this item isolated, it will be much less damaging to your credit score than if you had a foreclosure or repossession in addition to defaulting on other credit obligations.
It depends on the type of negative information. Here’s the basic breakdown of how long different types of negative information will remain on your credit report:
From the big three credit bureaus, TransUnion, Equifax and Experian, to your rights under the Fair Credit Reporting Act, the information below will help you navigate the credit report maze.
The credit reporting agencies – TransUnion, Equifax and Experian keep records on consumers. The reporting agencies work with lenders, creditors, insurers and employers to update and distribute your information to the appropriate institutions. Here’s an example of how the system works:
When you apply for a new credit card the creditor requests a copy of your financial history from the reporting agencies. This causes a “hard inquiry” to be recorded on your credit report. The creditor uses your credit reports and scores along with income and debt information to determine what rates to offer. You start to use the new credit card and the creditor reports your activities to the credit reporting agencies about every 30 days. The credit reporting agencies update your credit report as they receive new information from creditors or lenders so your credit profile constantly changes based on your financial activity. The next time you apply for a credit card or loan, the process repeats.
Your credit report – Your credit report is divided into six main sections:
When you open a new account, miss a payment or move, these sections are updated with new information. Old negative records will stay on your credit report for 7-10 years.
Positive records can remain on your credit report longer.
Not all creditors report to all three agencies and the agencies obtain their data independently so your reports from TransUnion, Equifax and Experian could be substantially different from each other. That’s why it’s important to check your three credit reports every 6-12 months to ensure that the information is accurate and up-to-date.
Correcting inaccuracies – Under the Fair Credit Reporting Act, consumers are protected from having inaccurate information on their credit reports.
Working the system – Managing your credit and maintaining a good credit history can lead to better rates on major purchases. We recommend that you check your credit reports every 6-12 months or at least 3 months before a major purchase in order to guard against damaging inaccuracies and identity theft. Routine check-ups along with paying your bills on time, keeping your credit card balances below 35% of their limits and correcting any negative inaccuracies will help you maintain a healthy credit profile.
History – The credit scoring system became prevalent during the 1980’s as a way for lenders to quickly evaluate a potential borrower’s creditworthiness. The system was found to accurately predict financial risk over time and grew to several different industries. Now credit scoring is used by lenders, insurers, landlords, employers, utility companies and even judges to evaluate your credit behavior.
Algebra – Thousands of different credit scoring formulas exist today for various evaluation purposes. Each unique credit scoring system is accurate and correct for its own application. The credit scores you can order online use an algorithm created for consumers that approximates these different formulas. Your online credit scores may vary a bit from the score your lender uses, but they should be in the same range depending on the score you purchase and it purpose.
Chemistry – The basic credit scoring formula takes into account several factors from your credit reports. The impact of each element fluctuates based your own credit profile:
Payment History – A good record of on-time payments will help your credit.
Outstanding Debt – High balances in relation to your credit limits can harm your credit. Aim for balances under 35% but to get biggest impact pay balances as close to 0% as you can.
Credit Account History – An established credit history makes you a less risky borrower. Think twice before closing old accounts before a loan application.
Recent Inquiries – When a lender or business checks your credit, it causes a hard inquiry and a slight ding to your credit score. Apply for new credit in moderation.
Types of Credit – A healthy credit profile has a balanced mix of credit accounts and loans.
Economics – When you are preparing for a major purchase make sure you check your credit scores and credit reports from all three credit reporting agencies: TransUnion, Equifax and Experian. Looking at your scores and reports a few months before your loan application will help you get a complete picture of your credit health. Worried if your credit score makes the grade? If your credit score is above 740 you will probably qualify for a preferred loan. Under 640, you may have trouble receiving new credit. If your credit score is a little low, pay your bills on time, reduce your debt, remove inaccuracies and avoid new inquiries for a few months. Plus, don’t forget that your credit score is not the only factor a lender may look at when they are evaluating your financial standing.
We have all heard the rumors…from neighbors, relatives or friends. There are a wide variety of myths floating around about what you should and shouldn’t do to manage your credit. Certified Credit Experts has exposed these urban legends to provide you and your informers with the truth about credit:
1. Your score will drop if you check your credit – Fortunately, this one is definitely not true. Checking your own report and score is counted as a “soft inquiry” and doesn’t harm your credit at all. Only “hard inquiries” from a lender or creditor, made when you apply for credit, can bring your credit score down a few points. Worried about damaging your credit while shopping around for a loan? Multiple inquiries for the same purpose within a short amount of time (a few weeks) are grouped together into a less damaging period of inquiry.
2. Closing old accounts is a good idea – To close or not to close, that is the question. Many people advocate closing old and inactive accounts as a means of managing their credit. But they should think twice before closing the oldest account on their credit reports. Canceling old credit accounts can lower a credit score by making the credit history appear shorter.
3. Once you pay off a negative record, it is removed from your credit report – Negative records such as collection accounts, bankruptcies and late payments will remain on your credit reports for 7-10 years. Paying off the account before the end of the set term doesn’t remove it from your credit report, but will cause the account to be marked as “paid” and show recent activity. You should consultant a professional or at least request the creditor to delete if the account is settled. Not all creditors will but you should always try.
4. Being a co-signer doesn’t make you responsible for the account – When you open a joint account or co-sign on a loan, you are taking on legal responsibility for the account. Any activity on these shared accounts, good or bad, will show up on both people’s credit reports. If you co-sign for a friend’s auto loan and they don’t make the payments, your credit profile will be hurt by their actions and visa versa. The only way to stop this double reporting is to refinance the loan or to have the creditor officially remove you from the account.
5. Paying off a debt will add 50 points to your credit score – Your credit score is calculated using a complex algorithm that takes into account hundreds of factors and values. It is very hard to predict how many points you can gain by changing one factor. For a person with a high credit score, just one late payment can cause a significant drop. If a person has a low credit score, it may not cause a large drop at all. Just keep paying your bills on time, reduce your debts, and have negative inaccuracies removed from your credit report. Good financial behavior and time are the two most important factors for your credit score.
Your credit score considers late payments using these general criteria;
So this means that a recent late payment could be more damaging to your credit score than a number of late payments that happened a long time ago.
You may have noticed on your credit report that late payments are listed by how late the payments are. Typically, creditors report late payments in one of these categories:
Of course a 90-day late is worse than a 30-day late, but the important thing to understand is that you can recover from a late payment prior to charge-off by getting and staying current with your payments. If however, you continue not to pay your debt and your creditor either charges it off or sends it to a collection agency, it is considered a significant event with regard to your score and will likely have a severe negative impact.
It’s important to always stay on top of all of your bills; your history of payments is the largest factor in your credit score. There may be circumstances which cause you to be unable to keep current with your bills – maybe an unexpected medical emergency or losing your job.
Before being late for any payment, it is recommended that you reach out to your creditor; the creditor may be willing to work something out with you that you both can live with. If your creditors won’t work with you, try to avoid having your account going so delinquent that the creditor charges it off, sells your account to a collection agency, or it becomes a judgment – you can never again get that account current once it charges off, becomes a judgment, or is turned over to a collection agency.
A bankruptcy will always be considered a very negative event on your credit report. How much of an impact it will have on your score will depend on your entire credit profile. For example, someone that had spotless credit and a very high credit score could expect a huge drop in their score. On the other hand, someone with many negative items already listed on their credit report might only see a modest drop in their score. Another thing to note is that the more accounts included in the bankruptcy filing, the more of an impact on your score.
A bankruptcy is considered a very negative event by your credit report regardless of the type. While there are many things to consider when considering filing for bankruptcy, you can expect it to impact your score for as long as the bankruptcy is listed on your credit report. However, as time passes, the negative impact of the bankruptcy will lessen. Here is a brief definition of the most common types of bankruptcy and how long you can expect bankruptcies to remain on your credit report (from the date filed):
Keep in mind that these dates refer to the public record item associated with filing for bankruptcy. All of the individual accounts included in the bankruptcy should dissolve from your credit report after 7 years.
Any type of account on which you owe money, such as a credit card, an installment agreement or otherwise, may be labeled as a “charge off”. In essence, this categorization refers to an account that is long past due. The general terms that apply to loans that are not paid on time are:
Delinquent – An account is considered delinquent if a payment has not been made on time.
Default – An account usually is considered in default if it is 30 days past due. The term indicates that the borrower has not paid as required through the loan agreement, and it usually will be reported to the credit bureaus at this time.
Charge Off – An account is charged off when the creditor deems it to be an uncollectible debt, or “bad debt”. Generally, this is when six months has passed since the date of the first missed payment.
This should indicate to you that a charge off is fairly serious. When a lender writes off your loan as a bad debt, your account no longer is listed as an asset to the company and instead becomes a “loss” that they are able to write off of the company tax return. The bad news for you is that they compensate for this loss by holding you responsible.
Collection Account is the term used to describe a person’s loan or debt which has been submitted to a collection agency through a creditor. The term is not used on debts with only original creditors.
A collection account normally appears on the credit report of a person (debtor) who has had one or more accounts referred to collection agencies, within the last seven years. Collection fees can range from $50 to $50,000. The name of the collection agency, and the amount of money a person owes, will be listed in the report. Also, in some cases, the agency’s contact information is listed. It is extremely important to remember that if a debtor pays off a collection account, the item will not be removed from the credit reports – it will simply be marked “Paid.”
A portion of your credit score – 10% to be precise – considers the number of inquiries made for your credit report. Credit inquiries are placed on your credit report each time a business requests a copy of your report.
The Fair Credit Reporting Act (FCRA) requires businesses to have an acceptable reason for accessing your credit report. Acceptable reasons include:
Companies who obtain your credit report under false pretenses or those who use it improperly violate federal law.
Two Types of Credit Inquiries:
Not all inquiries that appear on your credit report affect your credit score. Inquiries that are made because of an application you made for credit are the ones that affect your score. These voluntary, or “hard”, inquiries are the only credit inquiries that count towards your credit score.
When you review your credit report, you might notice that several inquiries appear from businesses to which you didn’t apply for credit. Other businesses might check your credit report because they want to offer goods and services to you. For example, creditors who send “pre-approved” credit card offers have often checked your credit report first. Credit inquiries are also made by potential employers, businesses that you already have credit with, and yourself. None of these “soft” inquiries count towards your credit score.
Your version of your credit report includes all inquiries. When lenders and creditors look at your credit report, only the voluntary inquiries appear.
How Inquiries Affect Your Score:
Inquiries on your credit report can indicate your risk as a borrower. Too many inquiries might mean that you’re taking on too much debt or that you’re in some kind of financial trouble and are looking for credit to help you out. Multiple inquiries over a rather short period of time can reduce your credit score.
Depending on how much information you have in your credit report, an additional inquiry might not affect your credit score at all. On the other hand, if you have a short credit history without a variety of accounts, an additional inquiry could cause your score to drop by a few points.
Credit report inquiries will remain on your report for two years, but only those made within the last year are included in your credit score calculation. The most recent inquiries have the most effect on your score.
Inquiries and Rate Shopping:
When you’re shopping around for mortgage and auto loans, you want to get the best rate – and you should. You might worry that having your credit checked by several lenders could hurt your credit score. The good news is that most credit score calculations treat all mortgage and auto inquiries as a single inquiry, as long as the inquiries are made within a certain period of time which is typically 30-45 days.
In general, when people talk about “your credit score,” they’re talking about your “FICO” score. But in fact, there are three different credit scores developed by Fair Isaac – one for each of the three credit bureaus – Experian, TransUnion and Equifax. Even if your information was exactly identical across all three, your scores might still slightly differ because the models for the three bureaus were developed separately.
While there will almost always be some minor differences in your scores across the three credit bureaus because of the slightly different models, significant score differences can result from the following situations:
The short answer is no.
We never recommend closing a credit card for the sole purpose of raising your credit score. This may sound a bit counter-intuitive; after all, cleaning up your credit profile by getting rid of old or unused credit cards sounds like a good idea – and it may be from an overall credit management perspective. If you are tempted to charge more than you should just because you have more availability to credit, then getting rid of that temptation by closing some credit cards might be your best course of action. However, your credit score takes into consideration something called a “credit utilization ratio”. This ratio basically looks at your total used credit in relation to your total available credit; the higher this ratio is, the more it can negatively affect your credit score. So, by closing an old or unused card, you are essentially wiping away some of your available credit and thereby increasing your credit utilization ratio.
It’s a bit tricky, so here’s an example:
Say you have 3 credit cards.
Credit card 1 has a $500 balance and a $2000 credit limit.
Credit card 2 is an unused card with a zero balance and a $3000 limit.
Credit card 3 has a $1,500 balance and a $1,500 limit.
In this scenario your credit utilization ratio looks like this:
Total balances = $2,000 ($500 + $1,500)
Total available credit = $6,500 ($2,000 + $3,000 + $1,500)
Credit utilization ratio = 30% (2,000 divided by 6,500)
Now, if you decide to close credit card 2 because it’s an old card that you never use, your credit utilization ratio looks like this:
Total balances = $2,000 ($500 + $1,500)
Total available credit = $3,500 ($2,000 + $1,500)
Credit utilization ratio = 57% (2,000 divided by 3,500)
You can see that your utilization ratio rose from 30% to 57% by closing the unused credit card.
Credit scores are available as an add-on feature of the report, for a fee.
Using annualcreditreport.com has some disadvantages, however. If the consumer disputes an item on a credit report pulled using the free system, the credit bureaus, under the FCRA now have 45 days to investigate, rather than 30. Also, any credit score purchased through the annualcreditreport.com system will be a “VantageScore”, not a “FICO” score.
The credit bureaus all have their own credit scores:
Equifax’s “ScorePower”, Experian’s “PLUS” score, and TransUnion’s credit score, and each also sells the “VantageScore” credit score.
Various factors determine your credit score, including the following:
such as bankruptcies, charge-offs, and collections
There are several types of credit scores available.
Typically, the higher the score is the better. Each lender decides what credit score range it considers to be a good credit risk or a poor credit risk. For this reason, the lender is the best source to explain what your credit score means in relation to the final credit decision. After all, they determine the criteria used to extend credit. The credit score is only one component of information evaluated by lenders. However in today’s mortgage market most lenders require at least a middle FICO score of 640.