Your Credit Report — The Basis of Your FICO Score
The credit reporting agencies maintain information on millions of
individuals. Lenders making credit decisions buy
credit reports on their prospects, applicants and customers from the credit
reporting agencies.
Your report details your credit history as it has been reported to the credit reporting
agency by lenders who have extended credit to you. Your
credit report lists what types of credit you use, the length of time your
accounts have been open, and whether you’ve paid your bills on time.
It tells lenders how much credit you’ve used and whether you’re seeking
new sources of credit. It gives lenders a broader view of your credit history
than do other data sources, such as a bank’s own customer data.
Your credit report
contains many pieces of information that reveal many aspects of your borrowing activities.
The ability to quickly, fairly and consistently consider all this information, including
the relationships between different types of information, is what makes credit scoring
so useful.
|
HOW FAST DOES MY FICO SCORE CHANGE?
Your FICO
score is based on a snapshot of the information in your credit report at
a point in time. Therefore, your FICO score can change when ever your
credit report changes. But your score probably won’t change a
lot from one month to the next.
While a bankruptcy or late payments can lower your
FICO score fast, improving your FICO score takes time. That’s
why it’s a good idea to check your FICO score 6–12 months before applying
for a big loan, so you have time to take action if needed. If you are actively
working to
improve your FICO score, you’d want to check it quarterly or even monthly
to review changes.
|
WHAT’S IN YOUR CREDIT REPORT?
Although each credit reporting agency formats and reports this information
differently, all credit
reports contain basically the same categories of information.
1. PERSONAL INFORMATION.
Your name, address, Social Security number, date of birth and employment
information is used to identify you. These factors are not used in calculating your
FICO score.
Updates to this information come from information you supply to lenders.
2. ACCOUNTS.
These are your credit accounts. Most lenders report on each account you
have established with them. They generally report the type of account (bankcard,
auto loan, mortgage, etc.), the date you opened the account, your credit limit or
loan amount, the account balance and your payment history.
3. INQUIRIES.
When you apply for a loan, you authorize your lender to ask for a copy
of your credit report.
This is how inquiries appear on your credit report. The inquiries section contains
a list of lenders who accessed your credit report within the last two years. The
report you see lists “voluntary” inquiries, spurred by your own requests
for credit, and may also list “involuntary” inquires, such as when lenders
order your report before making you a preapproved credit offer in the mail.
4. NEGATIVE ITEMS.
Lenders report delinquency information when you have missed a payment. Credit
reporting agencies also collect information on overdue
debt from collection agencies, and public record information from state and
county courts. Public record information includes: bankruptcies,
foreclosures, tax
liens, garnishments, legal suits and judgments.