Obtaining Your Free Credit Report

Today, it is easier than ever to obtain a free credit report. Your free credit check will show you your rating with each of the three major credit reporting agencies (Equifax, Transunion, and Experian). These agencies maintain a consumer's credit history and provide their credit reports to both consumers and lenders.

Although the three major credit reporting agencies typically charge a fee for getting your credit report, this will be waived if you have been denied credit in the last 60 days. In this case a consumer would write to one of the agencies with a copy of the denial letter and they will mail a copy of the report to you at no charge. Additionally, there are 3rd party services that offer consumers a free credit report.

You should not wait until you are denied credit to check your credit report. It is recommended that you view your credit report at least once per year if not twice. Also, any time a consumer is looking into a large purchase they should check their credit ahead of time. This allows for time to make any necessary adjustments or disputes.

Your Credit Score

Each person’s credit score is based on factual information that is kept in a consumer's Credit Report, if the information is accurate then it cannot be eliminated; it will remain on your credit report for seven years.

There are several different categories of information in your credit report. These include: Public Records, Account Information, Demographic Information, and Inquiries. Each section includes relevant information to an individual's credit worthiness. If there is derogatory information in any of these categories then it will affect your overall Credit Score.

How is Your Credit Score Determined?

Quite simply, a credit score is a number placed on an individual’s credit worthiness. There are currently several different methods for calculating credit scores. The most commonly used is the Fair, Isaac and Co. (FICO) scoring model. Each consumer’s credit file is reviewed and given an overall score based on the information that their file contains.

These scores are made up of several different factors, and each has a different impact on a consumer's overall credit score. By improving your credit score you will have a better chance at securing loans and other types of credit. But what factors should you look at when pursuing a higher credit score?

The Five Factors That Determine Credit Scores:

1. Payment Record 35%
2. Amounts Owed 30%
3. Length of Credit History 15%
4. New Credit 10%
5. Types of Credit in use 10%

Study after study shows that most of us do not adequately understand our debt-to-income situation. As bill pressures mount, our willingness to face it shrinks. In many ways, we have a “financial conscience” that appears only when we are already in trouble and have a poor credit rating. To avoid this situation, request your free credit report once or twice a year, and stay informed.