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Simple Answers
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Frequently Asked Questions about Credit History and Credit Reports
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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.
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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 generally in the 600s and 700s. The higher the score, the lower the risk for a lender, thus some creditors use your
credit score to help determine whether to give you credit and at what interest rate. We don't.
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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
— generally 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.
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Q: How am I affected by my credit score?
A: Lenders will 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.