Credit Report and Score

Credit is the money you borrow from somebody. Whenever you borrow money you become the debtor and the person who is crediting you the money is the creditor. Whenever you get a credit from somebody, it automatically implies that you need to repay the amount to the person you borrowed from within a certain period of time and with certain rate of interest. When you start making payment on your credit, the details of your payment gets reflected on your credit report.

Credit Report:

Credit Report is a statement which shows the public records, inquiries and the personal and credit details of an individual. This report is prepared by each of the three Credit Reporting Agencies – Equifax, Transunion, and Experian.

• Personal details include the name, current and previous addresses, date of birth, employers – both current and previous, social security number and the telephone numbers of the individual.




• Credit details include the debt amount, the monthly repayment of the debts, and all other lines of credit including credit cards.




• Inquiries include all the new lines of credit for which a person have applied over the last two years and finally.




• Public records include the bankruptcy, foreclosures, tax liens and judgments that are put against the person. All the information on your credit report is taken into account while computing your credit score.

Credit Score (FICO score): Credit score is a numerical three digit number generated on the basis of your credit report. Lenders usually use these scores to predict your potentiality as a borrower. This score was developed by Fair Isaac and Company, and so it is popularly known as the FICO score. The scale runs from 300 to 850 with higher score representing higher credit worthiness and hence a favorable interest rate for your loans. A score of 720 and above is considered the most favorable as it helps in getting loans at a very low interest rate.

FICO score is based on the credit information from the credit report. This credit information is divided into five categories which include the payment history, amounts owed, length of credit history, new credit and the types of credit used.

Ways to improve your credit score:

Improved credit score is always desirable since it gives you advantage in getting loans at favorable rate. But to have a high credit score, all you need to have is a good payment history. For this it is always essential that you do not close any existing credit cards accounts if it already has a good payment history. Even if you have not used the card yet, try and start using the card to make monthly utility bill payments and then repay the debt on time. In this way you can start building up your credit history. Moreover try to avoid applying for too many lines of credit as there will be credit inquiries whenever you apply for a new credit which will get reflected in your credit report. More and more credit inquiries suggest that you are credit hungry which will have a negative impact to your credit report and hence reduce your credit score.