| In 1949 Diner's Club launched the first charge-card | | | | The fourth section addresses inquiries into your credit |
| company. According to Dove Consulting, Americans | | | | history. Inquiries are classified as "hard" or "soft". Hard |
| now spend more with their credit cards - over $2 | | | | inquiries are generated when you authorize companies |
| trillion yearly - than they do with cash. The | | | | to access your credit report. These are tracked, and a |
| creditworthiness of card users is an increasingly | | | | large number of them in a one-year period will |
| important issue for creditors and consumers alike. | | | | negatively affect your FICO score. Soft inquiries are |
| Most people know that their creditworthiness is | | | | generated when current creditors check your status, |
| tracked on a credit report, but few understand how | | | | when card issuers review your file without being |
| scoring works. The FICO score was developed by | | | | solicited and when you personally check your credit. |
| Fair Isaac & Co. to evaluate the likelihood that | | | | These inquiries do not impact your credit report. |
| consumers will pay their bills. Scores range from 300 | | | | The fifth section details accounts that have been |
| points (highest risk) to 850 points (lowest risk). | | | | turned over to credit agencies. The sixth section |
| According to Equifax, one of three major credit | | | | provides information about liens, wage garnishments or |
| bureaus in the United States, FICO scores are the | | | | other judgments against you in federal, state or county |
| deciding factor on more than 75% of credit | | | | court records. |
| applications. In 2003, nearly 50% of Americans scored | | | | The final section outlines how to dispute information on |
| between 700 and 800. | | | | your credit report. Despite the claims of late-night |
| FICO scores are mathematically determined using five | | | | infomercials there is little you can do about delinquent |
| factors: previous credit performance, current debts, | | | | accounts and other damaging information but wait. The |
| credit tenure (how long you've had credit), types of | | | | Federal Trade Commission says most of this |
| credit available and pursuit of new credit. | | | | information remains on your report for seven years. |
| What's on The Report and Why Should I Care? | | | | Bankruptcy remains for ten years and lawsuit-related |
| An in-depth look at an Equifax report provides an | | | | information remains until the suit is settled. You don't |
| overview of the information that can be obtained from | | | | need such difficulties: make payments in a timely |
| any of the major credit reporting bureaus. An Equifax | | | | manner and address all credit issues immediately. |
| report is divided into seven sections. | | | | How That Information Impacts Your Score |
| The first section contains personal data such as | | | | Equifax cites late or missed payments, credit tenure |
| current and previous addresses, social security number | | | | and the size of account balances in relation to credit |
| and employment history. This is crucial information for | | | | limits as major factors impacting your FICO score. You |
| identity thieves, so protect it. Make sure it is accurate, | | | | may have an excellent income and pay your cards off |
| and shred it thoroughly before discarding it. | | | | fully each month, but over sized balances may still |
| The second section provides a summary of your | | | | negatively affect your score. In addition, if you don't |
| credit history. It includes the number and type of | | | | have a mortgage, car payments or other revolving |
| accounts (both open and closed) that you hold and | | | | debts it is unlikely that your FICO score will reach 850. |
| whether those accounts are in good standing. It also | | | | Check Your Credit |
| contains a record of your credit inquiries over the last | | | | Credit reports can be obtained instantly online for less |
| year. | | | | than $50. If you are contemplating a significant |
| It may seem like the more accounts you have, the | | | | purchase such as property or a second home, run a |
| higher your credit score will be, but in this case more is | | | | credit check on yourself at least 90 days prior to your |
| not necessarily better. Many financial institutions | | | | purchase. This gives you plenty of time to address any |
| assume that you will use all of your available credit and | | | | discrepancies that appear on the report. |
| factor payments that would be required to service | | | | The three major consumer credit reporting bureaus in |
| that debt. You may have a dozen cards with zero | | | | the United States are Equifax, Experian and Trans |
| balances and have no problem making monthly $2 000 | | | | Union. They operate independently, so request a report |
| mortgage payments, but if the bank factors your ability | | | | from each of them to get a complete picture of your |
| to pay on those cards your creditworthiness is | | | | credit history. |
| diminished. | | | | Conclusion |
| The third section provides detailed account information. | | | | Despite advertisements that promise to repair bad |
| It includes the name, type, number, opening date, | | | | credit, prevention is the best way to avoid problems. If |
| balance and status of every account on your record. | | | | it is accurate, there is little you can do to clear negative |
| A breakdown of each account provides payment | | | | information from your report but wait 7-10 years. |
| history, date of last activity and contact information for | | | | Prevent damaging information from getting onto your |
| the credit issuer. If you disagree with any of this | | | | credit report in the first place and improve your chance |
| information, challenge it. Under federal law, the agency | | | | of obtaining future financing by making payments on |
| has 30 days to respond. If your challenge is successful, | | | | time and addressing all issues that arise with creditors. |
| offending information will be removed from your report. | | | | |