A credit report is a summary of your financial history compiled by a credit bureau. There are three credit reporting companies in the US: Equifax, Experian, and TransUnion. Lenders use one or more of these to verify your credit history and determine whether or not to lend you money.

Creditors are required to report accurate information about you to the bureaus. The bureaus then translate all of that information into a single three-digit number. This number is your credit score. It tells potential lenders whether or not you are creditworthy. The higher the score, the more likely you are to get a loan at a favourable interest rate. People with low credit scores pay a premium to borrow money.

How to get your TransUnion credit report free of charge

Everyone is entitled to a free copy of their credit reports once a year. You can also get the reports free of charge if you’ve been a victim of identity theft, or if you’ve been turned down for a loan. Otherwise, TransUnion will charge you for it.

The easiest way to get a copy of your TransUnion credit report is online. You can also request the report by calling 877-322-8228 or in the mail by writing to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

What it all means

Your TransUnion credit report will contain a lot of information. Go over it with a fine-toothed comb to make sure that everything is correct.

At the top of the report, you’ll find your identifying information. This includes your name, current and previous addresses, your social security number, date of birth, phone number, and current and past employers. Under that you’ll see a summary of your credit history, including your credit score. TransUnion use the Empirica formula to calculate the score, which is slightly different from standard FICO model.

Under the summary, you’ll see a more detailed version of your credit history. This includes mortgages, credit cards, store cards, loans, etc. All of this information should be no more than seven years old. After that, it has to be erased. Then you have a list of any bankruptcies, tax liens, court judgements, child support arrears, etc. These things can stay on your credit report longer. At the bottom you’ll see a list of credit inquires. Every time you apply for credit, it’s noted on your report. Too many inquires will hurt your credit score.

What to do if there’s an error on your TransUnion credit report

It’s not uncommon to find an error on your credit report. It could be something small, or it may be full-scale identity fraud. The first thing to do is to contact TransUnion directly. You can file a dispute on their website or by calling 800-916-8800. You will then be asked to provide supporting information, such as cancelled checks, to prove your claim. Make sure you keep a detailed written record of all of your communications with the bureau. TransUnion will look at this information and make a decision. If your claim is valid, they will remove the erroneous information from your report.

Your credit score tells lenders how risky you are as a borrower. Check it annually for free, find and fix errors and get to work now to raise it.

The ads seem to be everywhere on TV. Somebody is offering to help you find your credit score. If you’ve never bothered to examine your score, you may be wondering what all the fuss is about. The truth of the matter is this: You should get your credit report, take a close look at it, repair it if you find errors and work at boosting your credit score if it’s low. Obtaining your credit report is one of the more important steps you can take to improve your personal financial situation and it’s absolutely free.

From valley low to mountain high

This three-digit number – from a Death Valley low of 300 points to a Mount Everest high of 850 – is used by creditors to determine how much of a risk they’d be taking in lending you money. It can be used also by prospective employers in deciding whether you’re trustworthy enough to hire and by landlords in letting you rent an apartment.

The top 20% of credit profiles receive a score over 780; the lowest 20%, under 620. Any score above the average mid-700s means you’re likely to be able to obtain a car loan, a home mortgage or other credit at a favorable interest rate. A below-average score generally means you’re going to have trouble. Don’t despair: You can raise a low score.

Factors that affect your score

Factors that affect your score and the importance placed on them differ from bureau to bureau. But all three utilize answers to the following questions.

* Have you paid your bills on time?
* How much do you owe compared with your credit limit?
* How long is your credit history? (The longer you have been using a credit card, for example, the more reliable you can appear to be.)
* Have you applied for new credit? (Trying to open too many new accounts raises suspicion.)
* Do you use many different kinds of credit? (A mix of credit cards and installment loans helps.)

Ways to boost a low score

Repairing your credit score can help you speed up credit approvals and lower your interest rates. This won’t happen overnight, but it will prove to be well worth the time and effort. Get started now. Here’s how to do it:

* Start paying your bills on time.
* Keep credit card balances low.
* Pay off debt instead of moving it around among several credit cards.
* Apply for and open new lines of credit so as to have a variety of them, but only when you really need them.
* Check your credit report regularly for accuracy. A simple letter to the credit bureaus disputing an error can go a long way toward fixing it.
* If you have let things slide to the point that a collection agency has become involved, settle up immediately.
* Don’t let friends and family members use your credit card unless you’re willing to assume responsibility for the charges they make and the fees they rack up.
* Consider a debt consolidation program. When you consolidate debts, you don’t have to deal with lots of creditors at many different interest rates; instead, you have one creditor and a single, potentially low, rate. Some people feel that one bill each month is easier to handle than many.

How to establish a credit history

If you have no credit and therefore can’t qualify for a credit card, you can, with permission, get yourself listed as an authorized user of another person’s card. Use the card with care, and within a year you’ll have a favorable credit history that should enable you to open your own account. Keep in mind that the person who agrees to let you be an authorized user must maintain a good credit score. If the primary card holder allows his or her score to fall, you could see your credit score fall as well.

If you’ve ever applied for a cell phone, tried to get a new job or moved into an apartment, you probably already know what a credit score is. In order to buy, rent or lease almost anything of value, you need to be considered trustworthy with money and reliable when it comes to making good on money that you owe. The way that most lenders find out how you handle debt is through your credit report, which delivers them a credit score that indicates how well you manage your money and debt.

Credit scores are valuable to lenders and may determine everything from your next car to your next job (employers also use credit checks as a means of checking up on your background) so get familiar with how your credit score is calculated and what the three-digit number means to your life.

The range of a credit score

The most common type of credit score is a FICO score. FICO scores range between 300 and 850. The higher your score, the more a lender will trust you with debt and believe in your ability to repay a loan. Typically, those who have a credit score that falls below 600 are believed to have poor credit, while anyone with a score over 730 is said to have excellent credit. But there is a middle ground where most Americans reside. Anything between 700 and 729 is above average, 670 through 699 is good and 585 through 669 is fair. The goal is to keep your credit score as high as possible in order to ensure that potential creditors seriously consider you for future loans.

Understanding your credit score

Knowing what your credit score is and how to improve it is very important in today’s economy. Watch this clip to learn more about credit scores.

How your credit score is calculated

Your credit score is calculated through many factors that all relate to how you handle money, manage debt and ultimately deal with credit. Here are just a few of the factors that help determine your credit score.

The amount of credit you have out in your name: Do you have 10 credit cards and a bunch of loans with overdue balances? Chances are it’s hurting your credit score. While it never hurts to maintain a healthy level of credit, you don’t want too many different types of debt on your credit report. It all goes into the equation when your score gets calculated.

Your overall reputation when it comes to paying down debt: Whether you pay debt back on time is important to creditors, so your credit score is partially calculated by how many late payment notices you’ve received or how consistently you’ve paid off your debt.

Any loans you have cosigned: If you’ve vouched for a loan for someone else in the past, this will show up on your credit report and affect your credit report.

Bankruptcy: Filing for bankruptcy essentially destroys your credit score and remains on your credit report for up to 7 years. This is why so many people say bankruptcy should only be used as a final option if you run into any financial troubles.

Everything else you own: From your house, which usually requires a mortgage, to your cell phone, which requires a monthly contract, there are plenty of things you use everyday that affect your credit score. If you were to sit down right now and make up a list of every bill you currently have in your name, you’d like find dozens of items in your life that help or hurt your credit score. It’s one reason you really need to educate yourself about your credit score and find ways to improve it over time.

Got a case of the credit score blues?

Worried about your credit score? This funny clip features a music video poking fun at credit scores. Of course, your credit score is important, but realize that everyone is going through the same battle you’re going through, too.

What a good credit score means to you

Whether you’re 18 and going off to college or 80 and enjoying your retirement, good credit is something that should be treasured. It opens up hundreds of doors in your life and allows you to do so much more than those with bad credit. And the best part about a credit score? It can always be improved. Making payments on time, trimming debt effectively and staying on top of your credit report are just a few ways you can prove how reliable you can be. It may not matter today, but someday when you go to buy a house, a car or even just a new cell phone plan, you’ll be able to do it because of your good credit score.

Your credit score is a figure lenders use to decide whether or not to give you credit or a loan, to determine your credit limit, and sometimes the interest rate you will pay. Landlords may also use it to decide whether or not to rent you an apartment. Services such as gas, phone, and electric may require a higher deposit if you have a lower score. It pays to get and keep your credit score as high as you can.

What’s your score?

If you are having trouble obtaining credit or a loan or renting, or if you are being hit with higher interest rates than others you know, your credit score may be to blame. To find out if this is the case, you need to get a copy of your credit report. The three nationwide companies that produce credit scores are Equifax, Experian and TransUnion. The Fair Credit Reporting Act requires these agencies to give you a free credit report once every 12 months if you request it. This can only be done through a central facility (by website, phone or mail) they have set up. Get a copy of your credit report from each of the three companies (they can vary) and go through them carefully. If there is anything you believe is inaccurate, contact both the reporting company and whoever provided the company with the incorrect information.

When is enough enough?

As far as credit cards are concerned, the fewer the better. There can be very good reasons for having a number of credit cards, but using them to increase your overall credit limit is not one of them—especially if you take out a number of new cards over a short period. The rating companies do not like this. They see it as risky behavior—and they’re probably right.

Pay your bills on time

Paying all your bills in full on time is the best way to get and keep a good credit rating. If you just can’t pay the full balance of your credit card, at least make the minimum payment on time. This can actually be better for your credit score than paying the full amount even a day or two late, which can be penalized in your credit score as well as costing you an exorbitant amount in fees.

Don’t transfer balances; pay them off

Don’t fall into the trap of transferring balances to a card promising a low introductory rate without very carefully reading all the fine print. Believe me, there’s almost always a catch, and the credit scorers are prone to see transferring balances as a bad sign. It is far better for your credit score to pay off your balances as fast as you possibly can.

Make a fresh start

Having paid out your outstanding balances, take out a few new cards that really suit your needs and offer the longest billing cycle. Then pay the outstanding amount each month on time. Your credit score will soar. If you can’t do that, look for cards with the best compromise between long billing cycle and low interest rate and pay off as much as you can of the balance each month on time.

Don’t spend to your limit

Credit rating companies start to get concerned if your balance is regularly more than about 25% of your limit, and will lower your score, which will lower the credit limit you can get, and so on.

Don’t go bankrupt

You may have seen ads suggesting the way out of all your financial difficulties is to go bankrupt. Don’t believe it! Bankruptcy is the absolute death knell of a credit score, and you must avoid it like the plague.

Don’t be foreclosed

Foreclosure is almost as big a disaster to your credit score as bankruptcy. Don’t let it happen! Act fast and act early—as soon as it looks like you may have trouble making repayments. Talk to your lender and try to work out a solution. Explore all avenues of government assistance.

Contacts

Annual Credit Report Request Service
1-877-322-8228

Fair Isaacs Corporation

http://www.myfico.com

Equifax

http://www.equifax.com

1-800-685-1111

Experian

http://www.experian.com

1-866-200-6020

TransUnion

http://www.transunion.com

1-800-888-4213

When people want to know how to manage their debt to increase their credit score, they often get stuck determining which kinds of debt impact their credit score the most. In reality, there are three kinds of debt: installment, revolving and open:

* Installment debt – A predetermined amount of debt to be paid off in equal amounts over a given period of time (for instance, leasing a car for $300 for 48 months). Each installment must be paid at the full, predetermined amount. The most common examples are mortgages and auto loans.
* Revolving debt –A debt in which the balance varies each month, and any unpaid amount is rolled over into the next month’s bill. The most common example is credit card debts.
* Open debt – Like a revolving debt, an open debt is based on a varying balance each month. These debts must be paid in full each month. Examples include cell phone, gas and electric bills.

Installment and open debts and your score

For installment debts, the amount you owe never changes. For open debts, you are in debt for a very short time. Since you will only be allowed to take out a predetermined or small amount, for these debts, the main influence on your credit score is whether or not you make your payments on time.

Revolving debt and Revolving Utilization

For revolving debts, the amount of debt you take out varies more than any other kind of debt, as does your balance after payments. Most people don’t pay off credit cards debts in full, and credit companies don’t expect you to do so. Instead, the credit bureaus have come up with the Revolving Utilization formula. To calculate this formula:

1. Add up the total credit limits of all your revolving debts
2. Add up the total balances remaining on these debts
3. Divide total balances by total credit limits

For example: Imagine you have one credit card with a $5000 limit that you owe $1500 dollars, and another with a $10,000 limit that you owe $3500. Your Revolving Utilization would be: $5000 ($1500 + $3500) / $15,000 ($5000 + $10,000), or 33.3%.

How this affects your credit score

Here are a few principles to keep in mind when considering the different types of debt:

Keep your revolving balances low – 30% of your credit score is determined by your Revolving Utilization ratio. While your credit limit will rarely change, the best way to keep this ratio low is to keep your credit card balances low in respect to the limit. You want to aim for keeping balances at 25% of the limit, and try to at least keep it below 50%.

Increase credit limits when possible – If you establish a good history of paying bills on time and keeping your balances low, credit card companies will be more likely to reward you with higher credit limits. This will lower your Revolving Utilization, and give a boost to your credit score.

Do NOT close unused accounts – It may make sense to cancel a credit card you no longer use frequently. However, doing so will almost certainly throw off your Revolving Utilization ratio, and can seriously hurt your credit score.

Don’t let creditors close unused accounts either – Credit card companies lose money off unused accounts, and will eventually close an account themselves if the period of inactivity is long enough. Make sure to charge something to all your accounts at least once a month. Ideally, you’d charge the card with the highest interest rate the least, and pay that debt off in full.