1. Your Credit Report is Different From Credit Scores
Credit scores are calculated using the information reported on your credit reports, which includes details of your credit accounts both open and closed, balance inquiries, payment history, how often you apply for credit, debt collection accounts and different types of public records, among other things.
2. Checking Your Own Credit Report Won’t Affect Your Scores
You can check your own credit scores every single day and it won’t have a negative impact on your credit scores, only hard inquiries (aka when a lender looks at your credit when you apply for a loan or credit card) have a negative impact on your scores, and the effect varies from consumer to consumer.
3. You Are Entitled To A Free Credit Report Each Year
You’re legally entitled to a free copy of your credit report from each of the three major credit reporting agencies: Equifax, Experian and TransUnion
4. Scores Are Calculated By 5 Main Components
Those components include; Payment history 35%, balance ratio 30%, age of accounts 15%, types of accounts 10%, new credit 10%
5. Your Bad Credit Score Can Potentially Cost You Thousands Over a Lifetime
A low credit score means you’ll most likely pay higher interest rates on things like a mortgage, auto loan, personal loans and revolving credit cards.
6. Credit Reports and Scores Are Not The Same
Your credit scores are generated based on information reporting in your credit report, it’s important to understand the difference between the two. Your credit report shows your history of accounts both opened and closed, your payment history, credit limits, and amounts owed. Your credit scores are generated based on this information.
7. A Fico Score is Different From A Credit Score
The FICO credit score is not the only credit scoring formula available. Each of the three major credit bureaus develop their own scoring models. And there are even multiple FICO score calculations. The key is that if you want access to your FICO credit score, which is mostly used for lending decisions. A credit score which can be obtained from numerous online companies is mainly used for consumers to view what is reporting on their credit reports.
8. Maxing Out Your Credit Cards Can Affect Your Credit Scores
Maxing out your credit cards can lower your scores. The cardinal rule is to keep your credit card balances under 35% of your available credit limits. Maxing out your credit cards can potentially lower your credit score by up to 100 points.
9. Over 45 Million Americans Do Not Have a Credit Score
If you’ve never applied for or used credit, you won’t have a credit history maintained by the three credit bureaus. Without a credit history, you also won’t have a FICO credit score.
10.There Are Multiple Credit Bureaus
Quite frankly there are three credit bureaus; Experian, TransUnion and Equifax. And each of them track and report information we can see on our credit reports. Each credit bureau works independent to one another and even tho they might report that same information, you will most likely see a variation of credit scores between the three and that is particularly due to them utilizing their own scoring modules.
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