If you have never looked at your credit report before, it can be difficult to understand your credit score. Looking just at numbers themselves, credit scores vary from 300, which is the lowest, up to 850, which is the highest. 732 is about the national average. Lenders will normally need you to have a rating of 750 or better to get the most optimal loan rates. You'll have a wealth of data concerning your debts once you have your reports on hand.
There are four sections in a standard credit score report -- identifying information, public records, credit history, and inquiries. Your name, address, and social security number are considered the basic identification information. Look at these details to be certain they are correct because sometimes your name might be misspelled, or there may be additional Social Security numbers. Also on your report will be your birth date, previous addresses, driver's license number, employer, and the name of your spouse. As this information is protected by security, and is confidential, you do not have to worry about it.
The main area to study in your credit score report is your credit history. Your accounts will be classified into 1 of 5 groups: Real Estate (first mortgage and second mortgage), Installment (automobile payments, regularly paid bills), Revolving (credit cards), Collection (delinquent accounts), and Other. Each account will show the creditor/lender's name, and also the number of the account. It should also show you the day the account was opened, type of account, your amount owed, account status, and whether or not you have maintained payments. If you find something "charged off", that means the creditor tried to collect but gave up. "R1" status shows how well you have made your payments, using a system of 1 to 9. If there are any late payments on your report, you will notice a small box with 30, 60, 90, or 120, showing how many days late you were. You are doing fine, if you have a green OK and a 0. If you find "charged off," "bad debt" or "placed in collections," then your account was taken over by debt collectors due to its being delinquent for at least 120-180 days. Charge-offs and Debt Collections are really damaging, as these bad credit scores stay on your report for seven years.
The public data part is your main threat on your credit report so you always hope it comes up blank. Things that might show up in this section include bankruptcy, divorce, a foreclosure, your wages having been garnished, judgments, civil actions, tax liens, or other legal actions taken that would negatively impact your credit scores. These are the most serious offenses for your credit score and will be on your report for ten years. In some instances, your nice credit score could take a hit of 300 points from these infractions. Because of this, ensure you do not encounter any legal issues with regards to your finances.
The last part of your credit score report has a listing of all third party inquiries into your credit scores. "Hard inquiries" are started by you when you complete a credit or loan application, whereas "soft inquiries" are triggered by companies that want your business or collect a bill from you. Filling out applications for new credit every couple of weeks or having several inquiries in a 14 week period can begin to ruin a good credit score. These inquiries take only 20 points away here and there, so it's no big deal, unless your credit is less than perfect to begin with.
After being laid off from his job, Matthew Stollinas had a hard time keeping up with his bills. He received Christian credit counseling from Family Life Credit and is back on track and living a life of financial freedom. Matthew recommends Christian counseling debt service to anyone going through financial troubles.
