What’s The Difference Between Your Credit Report And Credit Score

You have heard all about it from your friends, colleagues, banks, cell phone service, credit card companies and still have no idea what is a free gov credit report. You are not alone in this, as according to FINRA Investor Education Foundation, only 38% of participants had obtained their credit report in a study carried out in 2009. Ideally, this is a report detailing your financial activities and is often kept by lenders. Essentially, it defines your credit rating, which is used to show any financial risks you may have.

In your credit report, you will find your personal information. This includes identification details, your address and those of your former and current employer, your birthday, and your social security number. Another element is your credit history. This is a detailed record of your present and past accounts, any balances, your creditors, and your credit limit. There are also public records detailed in your report for any tax issues, bankruptcies, and other monetary judgments.

An inquiry section is also included to indicate the number of times others have accessed your report such as when you are looking for a loan. The most important aspect of your report is the credit score. Your credit score is a rating used to determine how credit worthy you are. It is usually in the form of a three-digit number ranging from 300 to 800. A good credit score range is reflected by a high score of over 680.

You can get your report from credit reporting agencies like TransUnion, Equifax, and Experian. They are mandated to give you a free report annually. It is very important to obtain your report at least every year because it does play a great role in your life. If you want a sound financial foundation, you will need to have a great credit score, which is only found in the report. Often times, it is possible to observe errors in your report be it misspelt names, wrong accounts or any other errors. As such, you must report the errors immediately to avoid having a bad credit score.

There are known mistakes that people make when it comes to their reports. First, be keen on how many accounts are active or closed, and your debts. You may have applied for a credit card and forgotten you had one. Having credit you do not require only indicates your lack of credibility and commitment, which makes you a risky debtor. Scrutinize all your accounts and creditors because they will all be in your report.

If you want the benefit of paying low interest rates, you have to find a way of improving your credit score. This might take you a while especially if your score is below average but you have no choice if you are to gain financial freedom. Your score is calculated in reference to some factors including punctuality of debt payments, the capacity of credit used, the extent of credit history, and types of credit.

You should ensure that you make regular payments of your debts to improve your score. Do this consistently until your debt to income ratio decreases. In addition, avoid getting more credit when you are paying for current debts. It is also wise to keep your accounts open after clearing your debts as it shows your credibility and ability to fulfill your commitments. Most people are used to making credit inquiries often and are unaware of how this can affect their score. Avoid these inquiries as they lower your score. If possible, you can raise your score by paying up your debts by cash. The one thing you must take seriously is to get your report regularly and monitor your scores.