Breaking
down this important record — how to read it, how to fix it
It’s
important to check your credit regularly when you are trying to build quality
credit and avoid identity theft. There are three nationwide credit agencies:
Experian, Equifax, and TransUnion that can provide a free credit report once
every 12 months. It’s not always the easiest thing to decipher a credit report
and know what to look for.
Here are some tips.
Credit report vs. credit score —
what’s the difference?
Your credit report has more
information and is more in-depth than just your credit score. (Your score is
not included in the free report, but can be authorized by federal law for a
free.)
The credit report is a detailed
listing of all your debts and payments going back through your entire payment
history. According to Kevin Gallegos, vice president of Phoenix operations for
Freedom Financial Network, “For each credit account you have, the report shows
creditors’ names, the amount owed, the highest balance owed, available credit,
whether the account is open or closed (and who closed it), the number of times
a payment was past due and whether the account is in default.”
The five sections of your credit
report include:
- Identifying
information. This is where you’ll find
your name, address, date of birth, Social Security number and aliases. It
may be a good idea to review this information, because you may end up
getting charged for debts that do not belong to you.
- Creditor
information. This section is usually the
longest and contains all of your information such as; how much you owe,
who you owe, current or past due debts, whether it is opened or closed,
and other status information. It’s imperative to make sure that this
information is correct.
- Collection
accounts. This section lists any and all
accounts that are in collection. Make sure this information and is
accurate, and if you do have debts try to pay them off as soon as
possible. Once the debts are paid, be sure to ask the credit bureaus
explaining that the debt is paid off.
- Public
records. Information regarding
bankruptcy judgments, liens, and overdue child support will be displayed
here. Review for accuracy as bankruptcy and financial problems can remain
for 7-10 years.
- Inquiry
section. This section is a list of
businesses that have reviewed your credit information. If there are
unfamiliar names checking out your credit, it would be best to contact
them and find out why.
In the
majority of cases the credit score ordered will be your FICO score which is
named for the company that developed it in 1989. Each agency has its own way of
calculating the credit score so your FICO score can vary depending on the
credit bureau that provides the score. The exact formula for determining a FICO
score is classified, but FICO does disclose some basics that can impact your
score. For example:
- Payment
history. Any late payments – credit
card, car loans, or mortgages will cause a negative impact to the FICO
score. On-time paid bills will increase the score. 35% of a FICO score is
applied here.
·
Amounts owed.
If there is a history of small balances and payments made on time, your score
will improve. If there are high percentages of credit owed, it will likely harm
your score. This category accounts for 30% of a FICO score.
·
Length of credit history.
This accounts for 15% of your score and it determines how long your credit
accounts have existed and how long since you have utilized some of the accounts.
·
Types of credit used.
This is worth 10% of your FICO score and looks at a mixture of a number of
loans, including mortgage, revolving, installment, and consumer finance. Having
different types of credit is beneficial for your score.
- New
credit. The last 10% of your FICO
score is determined by how many new credit accounts are opened up in what
period of time. The shorter period of time with more accounts, the more it
hurts your credit score overall.
The
percentages for each category should be able to assist consumers in determining
what areas are most impactful to their credit score.
What if there is an error on my credit score?
If there is a problem with your
credit score, call the credit bureau that provided the report and state your
case. The bureau is required to make fixes within 30 days or the line of credit
must be halted until the problem is fixed. Be sure to plan accordingly and pay
off any and all revolving debt!
Marcadis Singer, PA
5104 South Westshore Blvd.
Tampa, Florida 33611
info @ marcadislaw.com
(888) 547-1881
(813) 288-1881
New Clients
Ext. 247 Gil Singer
Ext. 240 Ralph Marcadis
Existing Client Client Liaison
Ext. 242
To Pay a Claim
Ext. 245
