How to Check for Bad Credit

Knowing your credit score is an important part of avoiding financing scams and shopping with confidence. A good credit rating entitles you to lower interest charges and more financing options. If you have bad credit, however, it is important to be able to identify which aspects of your credit history damaged your credit rating to avoid making the same mistakes in the future. The Fair Credit Reporting Act allows you to pull one free credit report each year to check for bad credit.

Instructions

1

Visit annualcreditreport.com to request your free annual credit report. Annualcreditreport.com is the only website approved by the federal government to provide consumers with free annual credit reports. If you have already pulled your free annual credit report, you may purchase updated copies of your credit records from Experian, Equifax or TransUnion at any time.

2

Review your credit report for negative items. Items that negatively impact your credit rating include late payments, charge-offs, collection accounts and public records such as judgments, bankruptcies and foreclosures.

3

Compare your credit card balances to the spending limit allowed on each card. Carrying a high balance in relation to your spending limit can damage your credit.

4

Check the age of your oldest account. The length of time you have had a credit history accounts for 15% of your overall credit score. Thus, a short and imperfect credit history is likely to result in a lower score than a longer credit history that also contains derogatory information.

5

Pull your FICO scores. Lenders use FICO scores along with the information contained in your credit report to determine your eligibility for financing. You can purchase your Equifax and TransUnion FICO scores directly from the Fair Isaac Corporation, which calculates them by visiting MyFico.com. Unfortunately, Experian does not sell FICO scores to the public.

6

Evaluate your FICO scores. Scores below 620 reflect a poor credit rating.