Credit Scores, Credit Reports & You
Building a good credit history is important to your financial health. Your credit history reflects how you manage your money, use credit products such as credit cards and loans, and pay your bills. It is also what lenders use to judge your credit worthiness – impacting you financially. Your credit report and credit score help determine the interest rates lenders are able to offer you when making major purchases such as buying a vehicle or home.
Click through the sections below to help you understand the basics of a credit report, your credit score and how you can monitor and affect your credit history.
What is a credit report and why is it important?
A credit report is a detailed record of your credit history, which lenders and financial institutions use to determine an applicant's creditworthiness. Credit reports may also be used by utility companies, insurance companies, apartment complexes and landlords as a way to gauge an applicant's ability to pay their obligations.
- What is the difference in the three major credit bureaus?
How do I know if I have a credit report?
If you have a credit card or a loan and are older than 18 years of age, you may have a credit report/score in your name. However, if you have newer loans or credit cards, your credit history may not have been established or reported to the three major credit bureaus.
How can I get a free credit report?
Federal law requires the credit bureaus provide you with a free credit report once each year. You can get your free credit report by visiting reputable credit reporting sites like annualcreditreport.com, a site mandated by the government to provide you this information. There are many other copycat sites that offer a "free" credit report, but actually charge you for the service.
What is a credit score?
Your credit score, also known as a FICO score, is what most lenders use to determine your creditworthiness. You have three FICO scores, one for each of the three credit bureaus – Equifax, Experian and TransUnion. Each score is based on information lenders report to the credit bureaus about your credit history. As this information changes, your credit scores may fluctuate as well.
What is the range of credit scores, and what is considered a good score?
Credit scores range from around 300 to 850, with higher scores being better. Each lender will have their own criteria and utilize the lenders information differently to determine what is considered a "qualifying" credit score. However, these ranges may provide a good estimate:
- 300-629: Poor credit
- 630-689: Average/fair credit
- 690-719: Good credit
- 720 and up: Excellent credit
How can I get a free credit score?
You can access your credit report for free, once a year, from annualcreditreport.com. While you are entitled to a free copy of your credit report each year, you will typically be charged to access your specific credit score.
RBFCU provides a low-cost service – IDProtect Plus – that offers fraud protection and identity monitoring to members. And, as an added bonus to this service, you can receive both your credit report and credit score once every 90 days. The IDProtect Plus fraud protection and identity monitoring service is available to members for $4.95 a month.
How can my credit score affect my ability to get a loan?
Your credit score is critical in your ability to secure a loan, because your credit score gives lenders a quick snapshot of your past ability to maintain loans and responsibly manage debts and payments.
Can I know ahead of time whether I qualify for a loan?
If you have questions regarding the determining factors needed to qualify for a loan, you can call our Consumer or Mortgage Lending Center. Several factors, including credit score, go into evaluating your ability to repay a loan. Your debt-to-income ratio, length of credit history and relationship with your lender may also affect the loan application decision.
Is there any way to recover if my credit score is bad or if I don't have a credit history?
If your credit score isn't where you would like it to be, you do have options to improve it and make yourself a better candidate for lower loan rates.
Simple steps like paying bills and making loan payments on time can be helpful, as well as making sure you manage your current debt responsibly.
RBFCU offers a Credit Builder Loan program if you are looking for an opportunity to build positive credit history. Through this program, you can take steps to show financial responsibility and prepare for positive future lending experiences.
What if I see fraudulent transactions or activity on my credit report?
Enrolling in IDProtect Plus can give you an added level of security and protection when it comes to your credit. By enrolling in this service, you'll have frequent, free access to your credit report, and can spot issues more quickly. In addition, the IDProtect Plus service also provides identity and credit monitoring, so you can stay on top of any potential fraud and can protect yourself from future credit issues.
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