How To Understand Your Credit Report

by How To Mommy on 01.01.12

Don’t you love love those catchy jingles about getting your credit report?

It’s all well and good except for one thing: while I think I understand what a credit report is, and know that higher is better, I’m not sure I know as much as I should.

I know a lot of online sites offer to give you your free credit score, but what does that mean?  Here’s what I found out:

  • A credit report is a record of your credit activities. It lists any credit-card accounts or loans you may have, the balances, and how regularly you make your payments. It also shows if any action has been taken against you because of unpaid bills.
  • Your credit rating is drawn from your credit report, which outlines your borrowing, charging, and repayment activities. A good rating helps you reach financial goals; a poor rating limits your financial opportunities.
  • A “good” credit score depends on the scoring system used by your particular lender. Different scoring systems use different scales. However, if you have a good credit score from one of the credit reporting agencies, you are likely to have a good credit score with your lender.
  • Most credit scores fall between 600 and 750
  • A score above 700 usually suggests good credit management

Since your credit report influences whether you are able to buy a home and get a job, it is extremely important to protect your credit rating by making loan and bill payments on time and by not taking on more debt than you can handle.

Thanks to the Federal Reserve Bank of San Francisco for the great info!

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