intro to credit reports and scores
4 minutesWhen you apply for a credit card, car financing or any other loan, the company or lender checks your credit report. They get a copy from one or more of the major credit bureaus: Equifax, Experian and TransUnion.
It shows your history of getting credit, making payments and other factors. Think of it like a report card for your credit.1
what's in your credit report
Your credit report has four categories: personal info, credit accounts and history, credit inquiries and public records.
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personal info
This is any info that could be used to identify you, like name, birthday, address and Social Security number. -
credit accounts
This section shows open, paid off and closed credit cards and loans. It also shows how long you’ve had accounts, credit limits or original loan amounts. -
credit inquiries
This shows who’s accessed your report. If you apply for credit, it’s known as a hard inquiry and can affect your credit score. Checking your own credit or a company prescreening you is a soft inquiry and won’t affect your credit score. -
public records
Bankruptcies are shown here. A Chapter 13 bankruptcy stays on your credit for seven years from the filing date; Chapter 7 stays on for 10 years.
what's a credit score?
It’s a three-digit number that shows how likely you are to repay debt. If your credit report shows a long history of on-time payments, it may mean higher credit scores, which can help you get credit cards and loans with more favorable terms.
On the other hand, late payments, bankruptcy and other negatives can mean lower credit scores and make it harder for you to get approved for credit cards and loans, or you may have to pay a higher interest rate.1
There’s more than one credit score, but this lesson will focus on the FICO® Score.
how your FICO® Score is calculated
Your FICO® Score is based on five factors2:
payment history (35% of your score)
Have you made payments on time?
amounts owed (30% of your score)
How much of your available credit are you using?
length of credit history (15% of your score)
How long have you had credit?
new credit (10% of your score)
How often are there credit inquiries and new account openings?
credit mix (10% of your score)
What kind of accounts do you have?
do you need a minimum FICO® Score to get credit?
FICO® Score requirements will vary from lender to lender. Some only want to lend to less-risky consumers; others will work with people who have less-than-ideal credit histories.
where to get your credit reports and FICO® Score
You’re entitled to a free weekly credit report from each of the three credit bureaus. You can check your FICO® Score for free any time if you have a WebBank/Fingerhut Fetti Credit Account. There are other ways to get your FICO® Score, some of which may include a fee, so do an online search when you’re ready to get yours.
1
https://www.experian.com/blogs/ask-experian/what-is-a-credit-report
2 https://www.experian.com/blogs/ask-experian/credit-education/score-basics/what-affects-your-credit-scores/
FICO is a registered trademark of Fair Isaac Corporation in the United
States and other countries.
Fingerhut Credit Accounts are issued by WebBank.