Lenders use credit reports and FICO scores to determine a consumer's creditworthiness. It is important for people to understand their credit report and scores in order to maintain good credit or improve their scores.
Credit Report
A credit report lists a person's personal information, such as current and previous addresses and employment history. It also includes revolving accounts, charge-offs and any lawsuits associated with the individual. The three major credit bureaus, Equifax, Experian and TransUnion, may have different information in your credit report since every creditor does not report to each bureau.
FICO Score
A FICO score is calculated using the information contained in your credit report. Various factors affect a FICO score differently. The score is based on payment history, amounts owed, length of credit history, age of current accounts and types of accounts. Most people are unaware of exactly how much weight each factor carries in your score. For example, credit cards may have a different effect on your score than a mortgage loan.
How to Get Your Credit Report and Score
You can obtain a free copy of your credit report under the Fair Credit Reporting Act. Equifax, Eperian and Trans Union have set up a central website through which consumers can request a copy of their report. Visit annualcreditreport.com for information. If you want your FICO score, you will typically have to pay. Some credit monitoring websites include your credit score with a subscription.
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