FAQ

Q:

What is a credit report?

A:

A credit report is the official record of how you pay the money you owe to your creditors; including past borrowing and repaying. A credit report contains all of the information related to your finances, such as payment history and amounts owed.

Q:

What is a credit/FICO score?

A:

The Fair Isaac Corporation has developed the FICO scoring system which is used by the three nationwide consumer credit reporting companies: Equifax, Experian and TransUnion. Your credit score is the numerical value calculated from the information in your credit report, it can range from 300 to 850, and most people score in the 600s and 700s. The higher the score, the lower the risk for a lender, thus creditors use your credit score to help determine whether to give you credit and at what interest rate.

Q:

How is my credit score determined and can I improve it?

A:

Your credit score is determined by a multipart mathematical equation taking into account a variety of financial factors, and it is mainly influenced by how you pay your debts and how much debt you owe.

Your credit score demonstrates your credit risk at a particular point in time. Your financial activity can either raise or lower your credit score -- as you make payments on time, avoid excessive inquiries into your credit report and pay off balances, your credit score will slowly improve. Alternatively, late payments, allowing debt to roll-over each month rather than paying it off, and owning too many credit cards can lower your score.

Q:

How am I affected by my credit score?

A:

Lenders will trade off the cost/benefits of a loan according to its risks and the interest charged, and will thus charge a higher price for higher risk customers.  Therefore, your credit score impacts your interest rate and loan terms, and in turn, affects your monthly payments on loans.

Additionally, establishing a solid credit history will not only affect your ability to borrow money or buy items on credit, but it may also be requested by employers and landlords.

To give you an idea of how payments can change based on your credit score, see the chart of how interest rates and monthly payments on a $150,000 30-year, fixed-rate mortgage are affected by the FICO credit score (as of March 2007).

Your FICO Score

Your Interest Rate

Your Monthly Payment

760-850

5.78%

$878

700-759

6%

$899

680-699

6.18%

$916

660-679

6.39%

$937

640-659

6.82%

$980

620-639

7.37%

$1,035

Q:

How do I obtain my credit report?

A:

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies - Equifax, Experian, and TransUnion - to provide customers with a free copy of his/her credit report once every 12 months. To order, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.