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How to Read a Credit Report?
Client Identifications – Name, Date of Birth, Address, Previous Address, Employment History
Public Records– Information derived from the public court systems regarding financial records, tax liens, foreclosures, bankruptcies and child support
Trade lines – These items can consist of credit cards, home loans, auto loans, monthly installment loans, etc.
Collections – Accounts reported to collection agencies that are considered unpaid/and or negative debt
Inquiries – Companies and or individuals that have pulled your credit for the purposes of monitoring your credit, credit approval, and or pre-approval. Some inquiries are only seen by the consumer and any inquiry done by a consumer does not affect their credit score.
How is your Credit Score affected?
New Accounts
Your score can be affected by the following things:
- New accounts
- Number of recent credit inquiries
- How many new accounts have been established? This affects your score by 10%
Length of Your Credit History
- The length of time the new accounts have been established affects your score by 15%
- Length of credit history, meaning how long your accounts have been open.
Types of Credit
Make sure that you have different kinds of accounts open. This affects 10% of your overall score.
- Credit Cards
- Mortgage Loans
- Auto Loans
- Retail Credit
Amount that you Owe
This affects your score by 30%, i.e., the proportion of balances to the actual credit limit! Most people max out their cards not knowing that it affects their score!
- Number of accounts with a balance
- Amount owed on certain accounts
Payment History
35% of your credit score is affected by your payment history. Examples are,
- How many times you have been late,
- How delinquent are your accounts,
- The number of delinquent accounts you have
- This is why it is extremely important to pay your bills on time!