Your credit card history is tracked by companies known as credit bureaus. In the United States, three major credit bureaus keep up with your credit account history – Equifax, Experian, and TransUnion. Your credit report plays a major factor in your ability to get new credit cards (plus loans and many other services).
What is a Credit Report?
Your credit report is a compilation of many of your financial accounts. Your credit report contains these types of information:
- payment details about your credit cards and loans
- delinquent accounts that have been sent to debt collectors
- judgments from lawsuits
- past bankruptcies
- foreclosures
- vehicle repossessions
- student loan default
- a list of businesses who’ve recently requested your credit report
For each of your credit card and loan accounts, your credit report lists information about the account and your payment history. This includes:
- the type of account
- the original loan balance or credit limit
- the current balance
- payment history for the past seven years
- whether you’ve been late on the account
- whether the account is shared with someone else
Who Checks Your Credit Report?
Creditors and lenders check your credit report whenever you make an application for a new credit card or loan. Your existing creditors might check your credit report periodically to decide whether you’re getting the best interest rate or if you’ve recently applied for a credit limit increase. Credit card companies who you’ve never done business with might check your credit report to send you pre-approved credit card offers.
Debt collectors check your credit to make sure they have the right contact information for you. They use your address and phone number listed on your credit report to contact you about collection accounts.
Potential employers review your credit report as part of the hiring process. If you’re up for a promotion or raise, your current employer might check your credit report before giving you the good news. Credit report checks are more common for financial and top-level executive positions.
Your credit report isn’t a secret. You have a right to view your credit report and the information it contains. You can purchase your credit report directly from the credit bureaus. Or, you can receive it free via a federal law from a special website - www.AnnualCreditReport.com. It’s a good idea to view your credit report at least once a year to be sure the information listed is correct. Checking your credit report is often the first way to detect credit card fraud, a situation that happens when your credit cards are used fraudulently or new credit cards are created in your name.
What is a Credit Score?
Your credit score is a numeric summary of the information in your credit report at any given time. Your credit score is a three-digit number ranging from 300 to 850, with higher scores being better. How you use credit cards impact your credit score which in turn impacts your ability to get additional credit cards in the future. Your creditors might even use your credit score to determine decide whether to close your credit card.
You have a credit score for each of your credit reports from the three credit bureaus. Since your credit reports can contain different information, your credit score could be different from one credit score to the next. It’s a good idea to know all three of your credit scores because you never know which score a creditor might check.
What’s in Your Credit Score?
Your credit score is influenced by five key things that come directly from your credit report:
- Your payment history
- Your level of debt
- The types of accounts you have
- How long you’ve had credit
- Your recent applications for credit.
Learn more about how these factors play into your credit score by reading: How Credit Cards Impact Your Credit Score.
Your credit score can only be calculated based on information that’s in your credit report. So you can be sure that certain factors don’t influence your credit score. For example your ethnicity, marital status, and income will not (directly) raise or lower your credit score.
Why Your Credit Score is Important
Your credit score is a quick way for creditors and lenders to judge your creditworthiness. It’s easier for businesses to make lending decisions based on a number than the pages of information in your credit report.
Not only will your credit report play a factor in whether you get approved for credit cards, loans, and other decisions, it also affects the cost you pay for certain services. Banks use your credit score to decide the interest rate you’ll pay on credit cards and loans. You may have to pay a security deposit for certain services, if you have a poor credit score. This includes things like utility and cell phone services.
Get More Information About Credit Reports and Scores
Credit reports and credit scores play a significant role in your credit life. It’s important that you know how they influence your ability to get credit cards and other services. Learn more about your credit report and your credit score in these articles:
