Building good credit is essential. Whether you’re purchasing a new car, applying for a mortgage or even trying to open a new utilities account, your credit score will determine if you’re eligible. DMV.com recommends checking your credit report before embarking on any major life decision as your credit score will be used by companies to see if you meet requirements. Credit history reports are also valuable tools used to fight identity theft.
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What You Will Find Here
Skip ahead to the section you need.
- What does a credit report include?
- Can I find my credit score?
- Types of credit reports.
- Can I clean up my credit report?
There are agencies, websites, companies and institutions that can help you monitor your credit score. Every person is allowed one free credit report every year, but you are encouraged to check your score more often than that. Some companies charge a fee while others are free, and some even offer credit score monitoring – which allows you to look out for suspicious activity on a monthly basis.
People fall victim to identity theft every day. Monitoring your credit report is the best way to fight identity theft. If it does happen, you will catch it quickly before it damages your credit score.
Click here to instantly download your credit report.
An in depth documentation of your borrowing and repayment history is what makes up the majority of credit reports. Reporting agencies divide your information into four main categories:
This category includes information used to identify you:
- Social Security Number
- Date of birth
- Driver’s license number
The Trade Lines section is made up of all your current and previous credit accounts. An important indication that comes from your trade lines is how much income you receive versus how much credit you have. This is called your debt to income ratio, and is used by creditors to determine whether or not you will be approved for a loan.
Your credit report is accessed by a variety of institutions throughout your life. Part of filling out an application for a home loan, credit card, or any other form of credit will include granting permission to companies to look into your credit history. The credit inquiry section provides you with a list of who has obtained your credit report.
Public Records and Collections
Credit reports also include data from collection agencies and public records. Any delinquent debt sent to a collection agency along with lawsuits and court proceedings make up the information in this section.
What is my credit score?
A mathematical algorithm is used to determine your credit score, also called a Fair Issac Corp score (FICO). This allows creditors to predict the likelihood that you will pay back a loan on time and in full.
A range between 500 and 800 are used to scale your score, are slightly different depending on which institution the report came from, and are averaged to determine your overall credit score. A score under 650 is considered a bad credit score, and anything over 680 is classified as a good credit score.
A good credit score will allow lenders to increase your spending limits, can lower your interest rates, and the loan approval process will go faster. Many companies offer easy-to-use online forms for checking your credit score.
Do you know your credit score? You are encouraged to order a credit history report to have the chance to fix your credit report, improve your credit score, and get prepared to apply for a loan or line of credit.
Different credit reports can be order for different reasons. See which types of credit reports are available to purchase below:
Annual Credit Reports
The Fair and Accurate Credit Transactions (FACT) Act requires each credit reporting agency to supply individuals with a free credit report once every 12 months.
Business Credit Report
Businesses apply for loans and lines of credit just like individuals do. And like a person’s credit check, credit reports for businesses work include a credit history and credit score. Business owners can also run a credit history check on companies they are planning to do business with to gather helpful information.
Employee Credit Check
An employer can run an employee credit check during the interview process. This is used to determine the financial responsibility of a potential employee. Financial institutions tend to order credit lookups more often than other companies to determine how fiscally reliable a candidate is.
Rental Credit Check
Landlords screening potential tenants will run a rental credit check. This report includes information on rental history such as broken leases and unpaid rent. Renter credit checks can be used to determine if the applicant can pay the rent on time.
Save time and run a credit report today. DMV.com recommends using a trusted source to check your credit score.
Cleaning up your credit report will help you make any large purchases, get a job, or save for your retirement.
The first step to clean up your credit report is to go over it and verify that everything on it was initiated by you.
Any items that do not look familiar should be addressed first. You need to stat fraud proceedings with the relevant companies for anything that was not initiated by you.
The next step is to pay off any debt you have in collection or with a collection agency. Get in touch with the company and figure out your options. A lot of times, credit report agencies are willing to cut a deal on a lower one-time payment or lower monthly payments to help you pay it off.
Finally, start paying off the remaining debt – starting with whichever loan or line of credit has the highest interest rate. This will allow you to pay things off in the quickest way possible while incurring the least amount of added interest debt.
Click here to instantly download your credit report.