Personal Credit

Personal FICO credit score ranges from 300 – 850. FICO stands for Fair Isaac Company, an organization that established an equation to represent your creditworthiness in a three-digit number. A score over 700 is considered good, 650 – 699 average, 600 – 649 fair, and anything less than 599 is considered poor. However, the information within your credit score, regardless of score may still be of concern enough to not have credit approved.

A credit report does not include information about your checking or savings accounts, bankruptcies that are more than 10 years old, charged-off or debts placed for collection that are more than seven years old, gender, ethnicity, religion, political affiliation, medical history, or criminal records.

Personal credit scores will affect many decisions made by many companies, not only for borrowing purposes:

Insurance Companies use personal credit scores as one of the factors in determining your rates and in some cases as a reason not to offer you insurance.
Many Employers will review your personal credit as part of the process in determining your eligibility for employment.
Utility and Cell phone companies use your personal credit score to determine if they require you to pay a security deposit before opening an account.
Rental property owners will use your personal credit as a factor in determining if they will rent their property to you.
Lenders use your personal credit score as one of their primary factors in determining your ability to repay the loan or credit.

There are three credit reporting agencies; Experian, Equifax, and Trans Union. Most companies that extend some form of credit to individuals will report to one or more of these companies. The manner in which you pay your debts is tabulated in a formula along with the amount of debt, your debt ratio compared to your available credit, and any negative reports that may have been filed such as bankruptcy, judgments, charge off’s, or settlements.

The following information is provided to these credit reporting agencies about your accounts:

Date account opened
Date closed and who closed the account – You or the lender.
Timeliness of payments
High balance
Last two year payment history
Past Due amounts

It is important to be aware of this information and ensure its accuracy. Many times companies report inaccurate information or the credit reporting company may input the information wrong. You may challenge any information that is on your credit bureaus by writing to them and filing a discrepancy.

Other information that affects your credit score:

Public Filings – Bankruptcies, tax liens, and collection accounts.
Trade lines – number of open accounts
Installment loans – fixed amount loans such as mortgages, auto, and Student loans.
Revolving Credit – credit cards, home equity loans, working capital loans, and department store credit cards.
Inquiries – each time your credit score is pulled it is considered an inquiry.
Hard inquiry – this is when a lender pulls your credit score to determine whether or not they will extend you credit. This pull does deduct points from your overall score.
Soft inquiry – this is when a company like an insurance company, an employer, or a property manager pulls your credit. Since it is not associated with extending credit, your overall score is not affected.
Length of credit history.

Personal information

This is also an important area to be aware of when researching your credit report. The following information can be input wrong or be altered, especially if someone is trying to steal your identity:

Names known by – make sure that your name(s) are spelled correctly. Even a middle initial inadvertently typed in wrong can cause scrutiny on your applications.
Current and previous addresses – make sure they are correct.
Date of Birth
Current and previous employment.

You can request one free credit report from each of the three reporting agencies one time per year at no charge. You may request more than one report a year, but usually at a fee. There are also services that charge a monthly fee that will allow you to see your credit report and score every month. You may also dispute any information provided by the credit reporting agencies by contacting them and filing a dispute form. The credit reporting agency has 30 days from receipt of your dispute to prove you wrong and provide you with proof of the information listed or change it. You must have a current credit report before anyone will work with you on a dispute. Phone numbers are provided on the credit reports.

Below is the contact information for each of the three bureaus:

Equifax:

Equifax Credit Information Services, Inc
P.O. Box 740241
Atlanta, GA 30374
www.equifax.com

Experian:

1 888 397 3742
www.experian.com

Trans Union:

TransUnion
2 Baldwin Place
P.O. Box 2000
Chester, PA 19022

Phone number: (800) 888-4213
www.transunion.com