Have you ever experienced this scenario? You purchase your credit card ratings from each of the three credit reporting bureaus, got the documents downloaded, and suddenly realized you had no idea what you are looking at. While a credit rating report is an important financial tool, you need to understand it before it will help you. Here are some tips to use when trying to understand your credit rating scores.
Where to Get a Copy
The first place to start in order to understand your credit rating is to get a copy of it. You can order a copy of your credit score from each of the three credit reporting bureaus. You can do this as often as you like without it having any impact on your credit rating. There is a small fee that you will have to pay in order to access this credit rating report.
If you want a free credit rating, you will need to find a company that offers some service that allows you to access your credit report for free. You can often get a free credit rating by signing up for this service, paying for one month or enjoying a free trial month, and then canceling your subscription. The free credit report you are entitled to receive from the bureaus each year does not contain a credit score, just the credit history information. If you want to see the actual credit rating scores, you will need to pay something or find a free trial offer to use.
Understanding the Document
Once you have the document in hand, you may be confused by what you see. The first thing you will want to look for is your FICO score. This will be a number between 300 and 850. If the number is below 650, you have a poor credit rating. Anything above 700 is considered a good rating. A score of 850 is considered perfect, and this is nearly impossible to attain. If you find that your credit is very low, you may be in need of credit rating repair help.
On the actual report you will find four main sections
The first section contains your personal identity information, such as your Social Security number, name, address, and phone number. There will likely be some variations on this page. You cannot remove them because they were reported by some creditor at some point. For instance, if a creditor spelled your name incorrectly when reporting your account that will become a permanent part of your credit history.
The second section shows your credit history
This lists all of your credit cards, loans, or other accounts, which may be called trade lines. As part of this section, you will be able to see your credit line, how much the balance on the account is, and how good you are at paying back the card. This may be indicated by a code. If the code is a low number, like 1, it means you are good at paying what you owe. A high number, like 9, means you are often making late payments to that account, and you may even have been labeled as delinquent.
The third section on the credit rating report is the public records section
If you have ever filed bankruptcy or had a judgment or tax lien placed against you, this will be recorded here. These actions have serious negative effects on credit rating scores, so if this section is blank, you are in decent shape.
Finally, you will find the inquiries section
This lists those companies and individuals who have asked about your credit rating. Hard inquiries are those made when you apply for a loan or credit card. These have an impact on your credit score. Soft inquiries, such as those you make yourself, do not have an impact.
How Your Credit Score Affects You
Now that you understand what your credit card ratings report means, you need to know how it affects you as a consumer. You probably already know that potential creditors, such as a mortgage or credit card company, will look at your credit score in order to determine whether or not they will offer you financing. However, others will look at your score as well.
When you apply for a job, your employer may look at your score to determine how financially responsible you are. Insurance companies look at credit ratings to determine certain risk factors about you as a consumer. Your insurance rates could increase based on your credit score, and you could lose that perfect job if your credit rating scores are low.
The bottom line is that credit card ratings affect every area of your life. Getting a copy of your credit rating report will show you if you need to work on credit rating repair. Take the time to get your credit score where it needs to be, and you will be far better off financially. Taking these steps begins with knowing what your score is and that requires getting a copy of your report and carefully analyzing it to make sure it is complete and accurate.