What is a Credit Report?

A credit report contains information about your financial history as well as your credit score. While these are typically used interchangeably, credit reports are more detailed, while credit scores are numbers between 300-850 and are used as an indicator for creditors to determine your creditworthiness. Reports provide much more information to creditors and are used to obtain mortgages, car loans, credit cards, etc. 

How Your Credit Score is Determined.

According to Experian, five factors in your report determine your credit score: payment history, total amount owed, length of credit history, types of credit, and new credit. If there are any negative factors on your report, such as paying loans or credit cards late or not at all, maxing out cards, or having too high of debt compared to your income, this will all lower your credit score. Doing the right things will repair your credit report and raise your credit score.

Raising Your Credit Score.

You know now that your credit score comes from an overall report containing this information and more, so it’s important to know what’s in it so you can fix errors or figure out how to raise your score. Keep your credit utilization ratio down to 30-40%. If your utilization ratio is too high, this can raise your score. Dispute errors on your credit report as soon as possible. Stay current on payments, and avoid applying for too many credit cards or loans that require credit inquiries. 

Checking Your Credit Report and Score.

A lot goes into your credit report and score, and you should keep up to date on it as much as possible. Banks like Wells Fargo and Chase provide free credit scores, but you should review your full credit report once a year from all three credit bureaus: Experian, Equifax, and Transunion. You can access these reports for free at AnnualCreditReport.com. 

For more information, check out https://www.investopedia.com/terms/f/fico-fair-isaac.asp.