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What is a credit report?

A credit report is a record of your credit history that includes information about:

Identity
Your name
Address
Full or partial Social Security number
Date of birth
Employment information

Existing Credit
Credit card accounts
Mortgages
Car loans
Student loans

It may also include the terms of your credit, how much you owe your creditors, and your history of making payments.

Public Records
Includes information about any court judgments against you, any tax liens against your property, or whether you have filed for bankruptcy.

Inquiries
Includes a list of companies or persons who recently requested a copy of your report.

A “good” credit score depends on the scoring system used by your particular lender. Different scoring systems use different scales. However, if you have a good credit score from one of the credit reporting agencies, you are likely to have a good credit score with your lender.

Most credit scores fall between 600 and 750
A score above 700 usually suggests good credit management

What Impacts a Credit Score?

The information that impacts a credit score varies depending on the score being used. Credit scores are affected by elements in your credit report, such as:

Number and severity of late payments
Type, number and age of accounts
Total debt Public records

Types of Credit Scores —

Generic and Custom
A credit score is a number lenders use to help them decide how likely it is that they will be repaid on time if they give a person a loan or a credit card. Your personal credit score is built on your credit history. Your Experian credit score ranges from 330 to 830. A decent credit score is essential for your financial well-being because the higher it is, the less of a credit risk you are. There are primarily two types of credit scores, generic scores and custom scores:

Generic credit scores are used by many types of lenders and businesses to determine general credit risk. You can access your generic score as one score using the same formula across all three credit reporting agencies.

Custom credit scores are developed for use by individual lenders. They rely on credit reports and other information, such as account history, from the lender’s own portfolio. They are unique to the specific business, or they may be used by specific types of lenders, such as credit unions. Custom credit scores can apply to specific types of lending, such as mortgage lending or auto lending.

Understanding Credit Score Factors and Improving Your Credit Scores

The elements from your credit report that shape your credit scores are called credit score factors. Some factors that may affect credit scores are:

The number and type of accounts you have (credit cards, auto loans, mortgages, etc.)
Whether you pay your bills on time
How much of your available credit you are currently using
Whether you have any collection actions against you
The amount of your outstanding debt
The age of your accounts

Take These Steps to Improve Your Credit Score
A credit score reflects credit payment patterns over time, with more emphasis on recent information. You can check your credit report to read a summary of what goes into your credit score.

Pay your bills on time. Delinquent payments and collections can have a major negative impact on a credit score.
Keep balances low on credit cards and other "revolving credit." High outstanding debt can affect a credit score.
Apply for and open new credit accounts only as needed. Don’t open accounts just to have a better credit mix. It probably won’t improve your credit score. Pay off debt rather than moving it around. Also, don’t close unused cards as a short-term strategy to improve your credit score. Owing the same amount but having fewer open accounts may lower your credit score. Protect your credit information from fraud and identity theft Pay Your Bills on Time (and other important tips)

Paying your bills on time is the most important contributor to a good credit score. Even if the debt you owe is a small amount, it is crucial that you make payments on time. In addition, you should:

Minimize outstanding debt Avoid overextending yourself Refrain from applying for credit needlessly Applications for credit show up as inquiries on your credit report, indicating to lenders that you may be taking on new debt. It may be to your advantage to use the credit you already have to prove your ongoing ability to manage credit responsibly.

It Takes Time to Improve Credit Scores

If you have negative information on your credit report, such as late payments, a public record item (e.g., bankruptcy) or too many inquiries, you may want to pay your bills and wait. Time is your ally in improving your credit scores. There is no quick fix for bad credit scores.

How Changes Affect Scores

One common question involves understanding how very specific actions will affect a credit score. For example, will closing two of your revolving accounts improve your credit score? While this question may appear to be easy to answer, there are many factors to consider.

Credit scores are based entirely on the information found on an individual’s credit report. Any change to the credit report could affect the individual’s credit score. Simply closing two accounts not only lowers the number of open revolving accounts (which generally will improve credit scores), but it also decreases the total amount of available credit. That results in a higher utilization rate, also called the balance-to-limit ratio (which generally lowers scores).

One change actually affects many items on the credit report. It is impossible to provide a completely accurate assessment of how one specific action will affect a person’s credit score. This is why the credit risk factors provided with your score are important. They identify what elements from your credit history are having the greatest impact so that you can take appropriate action.

How Long Does It Take to Rebuild a Credit Score?

Actually, you don’t rebuild the credit score. You rebuild your credit history, which then is reflected by your credit score. The length of time to rebuild your credit history after a negative change depends on the reasons behind the change. Most negative changes in credit scores are due to the addition of a negative element to your credit report, such as a delinquency or collection account. These new elements will continue to affect your credit scores until they reach a certain age.

Delinquencies remain on your credit report for seven years. Most public record items remain on your credit report for seven years, although some bankruptcies may remain for 10 years and unpaid tax liens remain for 10 years. Inquiries remain on your report for two years.

 

 

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Wright Financial
1108 N. Truman Blvd., Crystal City, MO 63019
636-931-2121

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Contact Information

Wright Financial Inc.

1108 N. Truman Blvd. 
Crystal City, MO 63019

Phone: 636-931-2121
Fax: 636-232-2069

Business Hours:
Monday-Friday: 9 a.m.-5 p.m.
By Appointment

NMLS # 1215682

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