A person’s credit score is a number used by creditors to gauge the “creditworthiness” of that person. Information from credit reports is subjected to an algorithm that then generates a number from between 300 and 850. These credit reports are, in turn, from credit reporting bureaus, of which three are considered the most influential: Experian, Equifax, and TransUnion. Creditworthiness is determined by the number generated by the algorithm. The higher the number, the more creditworthy that person is. A credit score is broken down as follows:
300-599 – Poor
600-649 – Fair
650-749 – Good
750-850 – Excellent
A credit score is given as a FICO Score, calculated through the Fair Isaac Corporation model, and the Vantage Score, generated by the three reporting agencies. You can have multiple FICO Scores depending on the type of credit you are applying for. Different versions of FICO scores exist for mortgages, auto loans, and credit cards.
You can have a free copy of your credit report from Equifax, Experian, and TransUnion once every year. If you need more or you need an updated one, you can purchase a copy at any time. When you need a Vantage Score from one of these agencies, however, you will have to buy it. There are no free copies for your credit score.
Credit repair is the term used to designate the actions taken to increase a person’s credit score. These processes include pulling credit reports from the three credit bureaus and disputing incorrect information on those reports that may lead to lower credit scores when calculated by banks and other financial institutions.
You will need to see all three credit reports, essentially records of your credit history, from each separate reporting agency. This is because not all financial institutions provide information to these three. Some provide one or two. Some don’t provide any information at all. Your credit reports may list all the same things but because of the discrepancy in reporting, the report from Experian may list very different items from the report generated by TransUnion. These items include bankruptcies, lawsuits, judgments, foreclosures and tax liens. The only way to fix your credit score is to determine what is wrong with your credit reports and file the corresponding disputes and actions.
Credit report disputes are actions taken by yourself or your representative (typically a credit repair company) to correct all inaccurate information listed on your reports. These include incorrect dates of opening and closing accounts, incorrect or unauthorized accounts, and unauthorized hard inquiries. It is critical that you pay close attention to the details since they could be signs that your identity is being stolen.
Getting a secured credit card is a great way to start repairing your credit rating provided they report to credit bureaus. Secured credit cards require a cash deposit and the deposit could be equal to the credit limit essentially making sure that your account balance is positive or zero.
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