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A Credit Report is the Adult Report Card

Posted by Advocate Debt Relief Team

7 months ago / May 4, 2022

Remember back in grade school when teachers would stress the importance of grades. Praise, special privileges, responsibilities, or an overall sense of accomplishment were the result of good grades. Bad grades usually meant that a note was sent home and privileges were taken away. The consequences of a poor credit report will result in more than a note home to parents.

What is it?

Not far from the truth, a credit report is like your adult report card for finances. It’s a complete review of your financial history that lenders will use to determine your level of responsibility. Landlords and employers often leverage this report as well. Payment histories on loans and debts along with a summary of other debts like student loans, mortgages, and credit cards are included as well.

Have you ever been turned down for a loan or a higher line of credit? It’s likely your credit report wasn’t favorable. Your credit history is measured by the credit score on your report. A good one can result in low-interest rates from lenders which can make life a lot easier (and less expensive) when trying to borrow. A bad credit score can have worse consequences. It leads to higher interest rates and can prevent you from getting certain jobs or lease offers.

Did I pass or fail?

A credit score is the numerical rating used to predict how likely you are to repay a debt. Several different types of credit reports are used by lenders, but the general range of a good score is between 700 and 780. Although some creditors use their proprietary credit scoring system, the two most commonly used credit scoring models are the ones designed by FICO® and VantageScore®. 800 and above is considered excellent in both systems. The total credit scoring range in either system is between 300 and 850. 

FICO® defines a good credit score ranging between 670 and 739. Anything above that range is considered very good or exceptional. Below a 669 is considered fair or poor.

VantageScore® defines a good and bad score with a slight variation. A good score is between 661 and 780, while a fair score starts at 601 and progresses from poor to very poor between 600 and 300. Regardless, it’s a good idea to know your score and how a lender will view it.

Request a copy

Every 12 months the Fair and Accurate Credit Transaction Act (FACTA) enables you to get a free credit report from each of the national credit reporting bureaus: Equifax, Experian, and TransUnion. www.AnnualCreditReport.com will direct you to one of these three bureaus to attain your report. Of course, many websites offer a copy of your credit report; however, many of them require some kind of purchase first. If you haven’t gotten your report within the last 12 months get a free one, it’s your right.

How to improve

Now that you know the grading system so to speak and have a copy of your credit report, it’s time to buckle down and hit the books. But you might ask, “How can I achieve better results?” Step one is to review your credit report for inaccuracies. Several reasons can lead to old or outright incorrect information on your report. If this is the case, dispute the information with the appropriate bureau in writing. Tell them what you think is wrong, why, and any supporting documents.

Aside from inaccuracies, the main way to improve your credit score is to manage your current debts. Paying your bills on time every month and decreasing your overall debt are the top two ways to perk up that score. If you’re having trouble making regular payments to lenders, talk to them. See if you can work out a payment plan to help make timely payments. One balance at a time, focus on lowering your overall debt to help your score as well.

Help is around the corner

Debt and credit scores can easily spiral out of control, especially if you have a history of struggling to make payments and have never seen your credit report. Looking at your results might give you the same sensation you had when you brought home your first report card with a big “F” on it. Don’t panic, professionals can help.

When the numbers don’t add up in your favor and you can’t find a way out on your own, Advocate Debt Relief can help. Similar to getting a tutor for that painstaking subject that doesn’t seem to click, a credit counselor can review your situation, set up lower interest rates with your creditors (when possible), and create a debt management plan that works. Debt consolidation, debt settlement, cash-out refinancing options, and more are at their disposal to find a custom fit for you. Get ahead of your financial situation by knowing your tools and using them. Your long-term financial goals will thank you for it.

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Filed Under: Finance