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Understanding Your Credit Report and Credit Score

When you are viewing your credit report and credit score for the very first time it can be really confusing to know what the number and the report says. This article will help you to know and understand what you are looking at better. You get a credit report and a score if you have ever completed any of the following taken a loan out even if it was for school, if you have taken advantage of a store offer such as financing or pay later arrangements, sometimes even your bills one such as your cell phone bill open up a credit on you. Everything you pay on time or are late on gets reported to a bureau that monitors people’s credit. These bills not only include your cell phone, credit and loans but they also include your rent, mortgage, utilities and any hospital bills even at times if you are in a country that does not have universal health care.

Credit score reportThe Credit Report will list any agencies and people you have had credit with throughout the last seven years, sometimes it is longer than that they retain the information for on you. It not only lists their name, but includes their telephone number and contact information usually. The report will also tell you how long you have had credit with them and about your monthly payments if any were late or if they were all on time. The last thing a credit report does show you is the amount of each loan or type of credit you taken out with each individual company. It will also tell you if you how much money is left on the loan or the amounts left of each of your credit lines are still available and how much you have to left pay off as well.

The Basics of the Credit Score:

The higher the number you have on your credit score the higher the rating is on your credit report as well. The higher number means that you have a better score and you can get credit at a much more reasonable rate than a person who has a lower score than yours. One last thing before we get into individual score categories is depending on the country where you live you can have up to three score ranges or more depending on where you are located. For example if you are in the United States then you have three because there are three credit reporting bureaus and they each do their own scores on you and sometimes they can vary and have varying information on your report as well.

The scores reflect if you have been paying your bills in a timely manner. They do not mean that you have paid them off in full, just that you have been making the payment arrangements as described in your agreements.  So you could have three credit lines open and let’s say you are making timely payments then your credit rating would probably be on the excellent score range or at the minimum of the good score range. Why? Because they were all being made on time it would qualify you into one of these categories. Sometimes it varies by your income if someone new is looking at giving you credit and that would put you in the good credit versus the excellent credit.

The credit scores go this way if you have a score of 720 or above you have an excellent credit score and rating. This is the best that you can achieve when it comes to scores. You should have no problem acquiring loans or credit cards with good annual percentage rates.

If you have a score of 680 to 718 then you have a good credit score and you can still get loans and credit pretty easily. Chances are you might have only missed a single payment on one of your credit lines or you were late and this might be the reason why you fall into this category.

A score of 620 to 679 means you have average credit score. This is where normal people fall into usually in your area. All it means is it is the average of the population. Plus you have made decent payments and most of them were paid on time. This can happen if you have missed more than one payment or were late a few times on a credit bill.

If you have poor credit your credit score will be in the range of 518 to 619. This means that you may have missed a lot of payments and possibly have stopped paying even on some of your credit or bills. Something else that can make you fall into this category from a better score is if you have ever filed bankruptcy, had a foreclosure on one of your homes or property, or if you rent you had a judgment passed against you and you ended up being evicted by your landlord. This is the lowest score that will allow you to get credit from a company the other scores just mean that you are plain out of luck when you are trying to get new credit and chances are your rates will be higher.

A bad credit score of 500 to 570 means that you will have to pay a very high APR if they do give you credit. It is possible that a bankruptcy might also make you fall into this category if you have also been late on bills or if you didn’t have decent credit to begin with before the bankruptcy.

If you have a score below 500 then you have seriously done something wrong and you need to get help with a counselor. You will not be able to achieve any form of credit with this score and you really ought to find out why it is so low and how you can start repairing your credit.

In conclusion the report basically lists all the creditors you have, contact information for them, amounts of credit due and that is left for your use, timely payments or not and how long you have had your credit lines open with each company.

The credit scores reflect if you have been late, missed payments and any other pertinent information on your life such as bankruptcy. The higher the score the better credit you have the lower the score the chances of getting more credit are worse and the rates will go up on the credit you are able to get from companies.

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