Credit Reporting

We cannot stress it enough: You must repay your loans, credit cards, etc. If not, you will be causing yourself a lot of problems.

When you make a late payment, your loan is considered delinquent. After 90 days of delinquency, your lack of payment will be reported to at least one credit reporting agency. If you are delinquent for more than 270 days, your loan may default. This will make it difficult to obtain a mortgage, an auto loan, credit cards, or other financing.

You should request a copy of your credit report to make sure it is correct. You are entitled to receive a free credit report from each of the three major credit reporting agencies once a year. You may contact the credit bureaus directly, but the free credit reports are only available through AnnualCreditReport.com.

Watch a screencast about credit reports and scores.

Credit Scores

A credit score is a nummerical value that is used to summarize your credit risk. The score is based on a snapshot of your credit report at a particular point in time. Your credit score helps lenders estimate your credit risk.

The most commonly used scores in the US and Canada are from FICO, which was created by Fair Isaac Corporation. Fair Isaac uses information in consumer credit reports to develop these scores. Your FICO score determines what credit may me available to you and with what terms it will be offered (interest, etc).

FICO scores provide a reliable guide to future risk based solely on your credit report data. The scores have a 300–850 point range. The higher the score, the lower the risk. But no score can absolutely determine whether a specific individual will be a good or bad customer. There is no single qualifying score that is used as a threshold by all lenders.

Credit Score Breakdown

• 10% - New credit
• 10% - Types of credit in use
• 15% - Length of credit history
• 30% - Amounts owed
• 35% - Payment history

Credit Bureaus

Experian

P.O. Box 949
Allen, TX 75013-0949
800-583-4080

Equifax

P.O. Box 740241
Atlanta, GA 30374-0241
800-685-1111

Trans Union

760 West Sproul Road
P.O. Box 390
Springfield, PA 19064-0390
800-916-8800

Remember, the free credit reports are only available through AnnualCreditReport.com.