Credit Reporting Agencies (CRAs) develop credit reports
Credit Reporting Agencies draw on information from a variety of sources to paint a picture of your personal credit history. Your credit report gives creditors a wealth of information that helps them decide whether or not to grant you credit. Information about how you?ve handled credit in the past can impact the credit you?re afforded in the future. Your credit report DOES NOT contain your race, religion, or political preference. But it will contain information about: Personal Identifiers: Your name, past and present addresses, previous employers, current employers and your Social Security Number (SSN). Credit accounts: Current and past loans and credit accounts, credit limits, current balances and payment histories. Payment history includes late payments, repossessions, charge-offs, and collection activity. Public records: Tax liens, bankruptcies , or legal judgments in lawsuits against you. Inquiries: Information about businesses that have requested your credit report within the last 12 months. Some credit reports also may summarize any negative information that the report contains.

The higher your credit score, the better it is.
Your credit score is a measure of your credit history. It helps potential lenders determine whether or not you are a good credit risk. Your credit score is a number between 400 and 850, that lenders use to help them decide whether you are likely to pay them back on time. The information contained in your credit bureau files is used to calculate your credit score. This score will affect your ability to get credit and the interest you will pay for it.

High vs. Low Credit Scores

Low Scores: If your credit score is on the low side, then lenders assume that you will be less likely to pay them back on time. They will either charge you a higher interest rate or possibly even turn your credit application down altogether. High Scores: If your credit score is in the high range, then you probably will be able to get better interest rates. This is true for all types of credit, including mortgages. Getting a lower interest rate on your mortgage can save you hundreds of dollars a year and thousands of dollars over the life of your loan.

What is a FICO Score?

The most well known score is the FICO? score, named after Fair Isaac and Company, the company that developed it. Each credit bureau uses this scoring model, but each has its own name for the credit scores it uses:

* Equifax? = Beacon?
* TransUnion? = Empirica?
* Experian? = Experian/Fair Isaac?

Any other score is not your FICO score. Because your credit file at each of the three major credit bureaus may differ, your scores may differ as well.

How Your FICO Score is Calculated:

Your FICO score is calculated based on your payment history, the amounts you owe, your level of new debt, the types of credit you have used and how long you have been using credit.

How To Improve Your Credit Score

It?s a good idea to obtain your credit scores every year. Look over your credit reports to pinpoint anything that might be keeping your score down and determine what steps you can take to improve it.

How Do I Know If My Credit Is Good or Bad?

The higher your credit score, the better your credit.
How to tell a good score from a bad score is not as black and white as it might seem. Different lenders may view your score differently. The top 20% of people using credit have scores of 780 and above. The lowest 20% have scores under 620. The majority falls somewhere in between. Your score will affect your ability to get credit and the interest you will pay for it. There's no one "score cutoff" used by all lenders telling them to deny or approve a loan. So it's hard to say whether your score is a good one or a bad one. Each lending situation is different. For example, a FICO? score of 750 may qualify you for a Platinum VISA credit card from one bank, whereas a score of 675 may indicate you're a better match for a standard card from the ABC bank. In general, if your score is low, then you are seen as statistically more likely to become delinquent on a loan. So the higher your score, the better.

A Free Credit Report?

BEWARE OF FREE CREDIT REPORT OFFERS

Do not use free credit report offers from companies other than the three national bureaus.
If you order your credit report from other companies that offer to get you your credit report for free, in most cases, you will automatically signed up for a free 30-day trial membership in a credit report information service. You must cancel within the thirty-days or your credit card will be assessed the annual membership fee that can be as high as $100 or more.