It wasn't all that long ago that
American's faced great financial crisis. As a nation, we struggle
with debt, and it keeps us from achieving a better life. Debt
Education is here to help you change all that ... just ask!
REAL PEOPLE ... CARING ABOUT REAL
ISSUES
Credit Education
Credit plays a critical part in nearly everyone's life, but understanding
what credit is and how it works can be a challenge. A great way
to understand the role credit plays in your life and to empower
yourself as a consumer is with a basic knowledge of two credit
fundamentals: Credit scores and credit reports
Credit Scores
Your credit score is a number based on the information in your
credit file that shows how likely you are to pay a loan back on
time. The higher your score, the less risk you represent. The
credit score that lenders use is called a FICO
score. Your FICO score helps a lender determine whether you qualify
for a loan and what interest rate you'll pay. Knowing what information
a FICO score considers is the first step in understanding how
to improve your credit health and build a better score.
Your credit file contains information that does not reflect
on your creditworthiness, such as race or income, which is ignored
by the FICO score.
FICO scores provide a fast, objective measurement of your credit
risk, which has a number of benefits for you. By understanding
what lenders view as good credit management, you can build a strong
credit history, improve your score and qualify for better loan
terms.
Credit Reports
Your credit report shows the information you have on file at
one or all of the three major credit reporting agencies: Equifax,
Experian and TransUnion. Each of these reporting agencies
(also known as credit bureaus) maintains their information separately.
So, the data you have on file may differ between them.Credit reporting
agencies maintain files on millions of borrowers. Lenders making
credit decisions buy credit reports on their prospects, applicants
and customers from the credit reporting agencies.
Your report details your credit history as it has been reported
to the credit reporting agency by lenders who have extended credit
to you. Your credit report lists what types of credit you use,
the length of time your accounts have been open, and whether you've
paid your bills on time. It tells lenders how much credit you've
used and whether you're seeking new sources of credit. It gives
lenders a broader view of your credit history than do other data
sources, such as a bank's own customer data.
Your credit report does not really exist until you or a lender
asks for it. It is then compiled by the credit reporting agency
based on the information stored in that agency's file. This information
is supplied by lenders, by you and by court records.
Tens of thousands of credit grantors (retailers, credit card
issuers, banks, finance companies, credit unions, etc.) send updates
to each of the credit reporting agencies, usually once a month.
These updates include information about how their customers use
and pay their accounts.
Your credit report reveals many aspects of your borrowing activities.
All pieces of information should be considered in relationship
to other pieces of information. The ability to quickly, fairly
and consistently consider all this information is what makes credit
scoring so useful.
Your credit report contains a variety of personal data. Some of
this information, but not all, is used when making lending decisions.
Mistakes happen and they
can affect your ability to obtain credit. By learning the
most common mistakes, you'll know what to look for when you review
your credit report. You should review your credit report from
each credit reporting agency at least once a year and especially
before making a large purchase like a house or car.
There's a lot of information to read through on the Debt Education
website, but we feel this is extremely important material. We
strongly recommend that you bookmark
this page right now. This will allow you to read
at your leisure, and should you need to attend to other matters,
easily return back here at your convenience.
The Debt Education website was built for you. Please explore
our website. You'll find resources and information on virtually
every aspect of financial planning and money management. These
debt delp resources are designed to help you get out of debt and
stay out of debt. You can achieve financial independence.
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Debt Education PO Box 5156, Santa Cruz, CA 95063
