Would you go to Las Vegas and bet your mortgage on where that little ball settles when the roulette wheel stops spinning? We didn’t think so and for the same reasons, you shouldn’t be gambling with what’s in your credit report.

Most Americans have no idea what their credit report says about them and that’s because they have never looked at it. Then they wonder why they are being turned down for that credit card or if they do get approved, why it comes with such a ridiculous interest rate.

The good news is you can get a free copy of your credit report from each of the three major credit reporting agencies (CRA) every 12 months under federal law. 

It’s all about your credit score

A credit score is a number that measures you as a credit risk. It helps businesses decide whether or not they should trust you with credit, and whether you’ll make your payments in full – and on time. It also impacts the terms that are offered and the interest rate that you pay. Unlike in golf, you want a high score as it will make it easier to get a loan, rent an apartment, or even lower your insurance premiums. 

Don’t be surprised if the credit scores that you get from the credit reporting agencies are not always be the same. The reason for this is there are many different formulas used to calculate credit scores and these may lead to differences in your scores.  And, businesses don’t always report to every CRA, and even when they do, they may send their information at different times. This means that on any given day, the information that one CRA has may differ from other credit agencies. 

A credit report is a summary of information about your credit activity and may include the following:

  • A list of businesses that have given you credit or loans 
  • The total amount for each loan or credit limit for each credit card
  • How often you paid your credit card or loans on time, and the amount you paid
  • Any missed or late payments or bad debts
  • A list of businesses that have received your report within a certain time 
  • Your current (and former) names, addresses and/or employers
  • And, any bankruptcies or other public record information

Oddly enough, the one thing you won’t find in your credit report is your credit score as that’s calculated separately and must be purchased from a CRA.  Or your credit card company may give it to you for free. Credit scores generally range from a low of 300 to a high of 850 and you can find additional information on credit scores on the Consumer Financial Protection Bureau website.

Okay, but why does my credit score go up and down?

A credit score is based on information in your credit report. Some factors include how much money you owe, how long you have owed it and even how many new accounts you have. Of course, how often you miss or are even late with payments has a big impact on your score. Changes in any of these things, good or bad, can cause your credit score to go up or down.

If you want more information on factors that can affect your credit score and how you can maintain a good credit score just follow these links, or contact us at www.creditkoda.org.

And remember, you need to Check, Correct, Rinse & Repeat…every year!