Credit Reports and Agencies

Credit Report

Your credit rating is based on almost everything that is knowable about your financial history: how much money you have in banks and credit unions; whom you owe money to and how much; how prompt you have been in making your payments; and where you work and how much you earn. All this information is collected by lenders and prospective lenders from the entries you make on loan applications, records of credit card transactions, and monthly payment information. The data are forwarded by your creditors to one or more of the three main credit bureaus in the United States: TransUnion, Experian, and Equifax.

These companies maintain huge databases of information on consumers. They evaluate the sum total of your transactions and assign a credit score-both a "report card" on how well you meet your present obligations and a prediction of how well you'll meet them in the future. A credit score is expressed in a range of numbers called a FICO credit score, "FICO" stands for "Fair Isaac Corporation," the company that developed the first credit scoring system in the 1950s, still the most widely used means of evaluating creditworthiness. FICO credit scores can range all the way from 300 (the worst) to a "perfect" score of 850; a score of 700 or higher usually indicates good credit, and a score of 600 or less generally is considered risky by lenders.

Many peoples credit reports have errors, if your credit report has one or more errors you may want to dispute the information. To do this, send a dispute letter.

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