Credit bureaus are companies that analyze and report your credit history. The largest credit bureaus are Equifax, Experian, and TransUnion. For consistency, 90% use a single reporting system, called a FICO score. A high score means you are a good credit risk; a low score means you may have questionable credit or perhaps not much credit established.
FICO scores range from 300 to 850. Generally, the higher the score, the stronger applicant you are. Here’s how the numbers compare:
Any time you apply for a loan or credit, companies will check your credit score: banks and credit unions, credit card companies, and insurance and auto finance companies. Lenders use the score to determine if you are a good risk and calculate how much money they are willing to loan. Landlords and potential employers may also check your credit score to gauge your reliability and character.
With a high credit score, you’re more likely to be able to borrow money for a car, home, or credit card. Also, the higher your score, the lower the interest rate you will pay, which means you save more over the loan’s life. A high score can also ensure you land the job or apartment you’re wanting.
A lower score means that you’ll more than likely pay a higher interest rate if you can secure the loan or credit. But take heart: you can improve your credit score on your own. The first step is to find out your score by logging on to www.Equifax.com, www.Experian.com, or www.TransUnion.com. Additionally, sites like www.AnnualCreditReport.com may offer an annual report for free.
When viewing the report, look closely to ensure your information is up-to-date and accurate. Pay special attention to any “derogatory entries.” These entries indicate that you have missed a payment, had an account in collections, owe back taxes, or had other credit issues.
Some derogatory entries can be incorrect.
You will be paying for those mistakes with a lower credit score and higher interest payments if they are. You might think you could make a call or send a letter, and the credit bureaus would correct a mistaken entry. But the process is more complicated than that: you’ll need full documentation to support your argument, and persistence to prevail. You can hire an attorney or credit professional to help you – but beware of the online scammers offering instant credit rehabilitation.
A strong credit score is vital in many areas of your life.
Correcting errors on your credit history will improve your score and improve your financial future. If you have questions, contact one of our loan officers. We’ll help guide you through the process and get you started on a stronger score.
Source: GreenPath Financial Wellness.Back To All Blogs
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