Your Credit Report

It's a document that contains your credit history. It's full of data from various resources of financial information. The report's information lists things such as: who you owe money to (utilities, hospitals, landlords and others), if you are late in making payments, your bank if you overdraw your account or do not make credit card, auto loan, or mortgage payments on time. Your credit report may also contain information about delinquent child support payments.

A credit report also includes personal information such as: your name, your address, recent previous addresses, telephone numbers (even if they are unlisted), your Social Security number, when you where born, and information about your employment history. Your credit report also contains issues of public record such as bankruptcies, tax liens, and civil judgments.

Right now, three large national credit bureaus dominate the credit reporting industry: TransUnion, Equifax and Experian. These credit bureaus run nearly 1.3 billion credit reports annually, and each of the three bureaus has approximately 225 million consumer credit files on record.

Also, the report includes a credit rating, or your FICO score, which range from around 300 to 850. In the US, the median FICO score is about 725. FICO scores above 720 are judged to be a "good credit" rating, while every FICO score below 600 is judged to be a poor rating.

Why is a credit report important?

Your credit report is important since most financial decisions in your life will use the data in your report to a particular degree. At the most basic level it will be used to determine if you will be granted credit, to a lesser degree it may be used to determine the rate you pay for mortgages, loans and even insurance. As an example of how your credit rating can impact you consider a mortgage of $216,000 amortized over 30 years. Assuming you have the minimum FICO score (620 to 639) to qualify for the mortgage you would pay 8.13% or $1605 monthly, but then if you had the biggest FICO score (760 to 850) you would pay 6.54% or $1371 monthly. This equates to a $234 savings a month, or $84,240 over the lifespan of the mortgage.

What can I do to improve my credit rating?

Though there are small differences between the way you FICO score is calculated, the basic formula is as follows:

Comprehending this you know how to boost your FICO score you; pay your bills on time, lessen the amount of debt you owe, limit your requests for new credit and stay away from higher risk credit.

What else can I do?

Visit the credit-bureau operated annualcreditreport.com to get a free copy of your credit report from every credit reporting firm. In the U.S.A. a federal law the FACT Act (Fair and Accurate Credit Transactions Act), entitles each legal U.S. resident to one free copy of their credit report from each credit reporting agency once every twelve months. However, this report does not contain credit scores.

Look over your personal details for mistakes, such as your name being incorrect, wrong address or Social Security numbers, etc.. In addition, you should review your financial info for details like loans showing a balance is due even though it has been paid off and credit cards or other accounts you previously cancelled. The more accurate your reports are, the fewer questions a lender will ask, so report all errors and have the mistakes rectified as soon as possible.