Credit Reports and Scores

Your credit report is a comprehensive record of your financial behavior, a snapshot of your creditworthiness. It contains a wealth of information that lenders use to evaluate your credit risk.

What’s in a Credit Report?

1. Personal Information: Your credit report includes your name, address, Social Security number, date of birth, and employment information.
2. Credit Accounts: This section details your credit accounts, including the type of account (e.g., credit card, mortgage), the creditor’s name, the date the account was opened, your credit limit or loan amount, your account balance, and your payment history.
3. Credit Inquiries: This section lists the companies that have requested your credit report, known as inquiries. There are two types of inquiries: hard inquiries, which occur when you apply for credit, and soft inquiries, which occur when you check your own credit or a company checks your credit for pre-approved offers.
4. Public Records: This section includes information on bankruptcies, tax liens, and civil judgments.

Credit Scores

Credit scores are three-digit numbers that distill the information in your credit report into a single metric. The most widely used credit score is the FICO score, which ranges from 300 to 850.

How Credit Scores Are Used

Lenders use credit scores to assess the risk of lending to you. A higher credit score indicates lower credit risk, which typically translates to better loan terms, lower interest rates, and higher credit limits. Conversely, a lower credit score may result in higher interest rates, lower credit limits, or even loan denials.