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A credit report is more than just a list of the lenders and a person's payment history. Credit reports contain information that can be used to help lenders determine whether to extend credit to you. Here is a list of some of the things a credit report may list:
There are five basic factors that constitute a credit score. Those factors are outlined here: Payment History: Approximately 35% of a credit score may be based upon payment history. A credit score is negatively impacted if bills are paid late or if there is a history of delinquent payments listed on the credit report, including matters of public record such as bankruptcy, collection accounts, etc. Amounts Owed : Approximately 30% of a credit score may be based upon amounts owed or other outstanding debt. A credit score can be negatively impacted if the amount owed is close to the credit limit. A low balance on two credit cards may be better than a high balance on one credit card. Length of Credit History: Approximately 15% of a credit score may be based upon length of credit history. A credit score can be positively impacted the longer that accounts have been open, especially if they are with one financial institution. Taking on More Debt: Approximately 10% of a credit score may be based upon how much new debt a consumer is incurring. A credit score may be negatively impacted if someone has recently applied for a number of new credit accounts. Promotional inquiries usually do not negatively impact a credit score. Types of Credit in Use: Approximately 10% of a credit score may be based upon the types of credit currently in use by a consumer. A credit score is usually negatively impacted by loans from finance companies. When a lender receives a credit score from the credit bureau, there will be reasons included that explain the score. If the lender rejects a request for credit, and the credit score was part of the reason, the reasons help the lender explain why the score was not higher. Credit score reasons are also useful in determining whether or not a credit report contains errors and/or how a consumer’s credit health might be improved. Other factors that lenders look at to determine who is a good credit risk are:
Creditors like stability. If you can show you are a stable, reliable person who has the ability to repay your debts, you will be a much better credit risk to a potential lender. Everyone should always review his or her credit report periodically. Errors can be and are made. Just a few points can make or break your ability to acquire new credit. Therefore, it's crucial to have an accurate credit report. Over the last few years, identity theft has become a bigger and bigger problem as well. An uncorrected error can cause years of stress and frustration. The credit reporting bureaus must correct any inaccurate information on your credit report....but you need to bring the inaccurate information to their attention. Once corrected, the bureau is supposed to send you a free copy of the credit report showing that the inaccuracy was corrected. |
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