There are three major credit reporting agencies in the country, they are Experian, Equifax and transunion. These agencies have a database of everyone’s credit file. When ever you apply to any company for credit, they use your identifying information to pull up your credit file. The identifying information they use are your name, address, social security numbers, date of birth and your phone number. They use these information to verify that they have the right individual.
WHAT IS A CREDIT FILE?
A credit file is a comprehensive history of the credit accounts that you have held. It shows your payment history, the number of accounts, how long you have held them, as well as your balances on each account. Most times, it will contain the dates that the account were opened, the contact of your creditors and your credit limit. A credit file is usually used to compute a credit Score. The credit score tells anyone looking at your score where you rank. Most people start building a credit file at the age of 18. Which is the age that they can legally enter into a binding contract.
WHAT IS A CREDIT SCORE?
A credit score is a numerical value given to an individual based on a scoring system used by the credit reporting agencies. There are two different types of scoring systems that a credit reporting agency could use. They could use a fico score, which ranges from 350-850 or a Vantage score which ranges from 501-990, with the lower end of the score telling the creditors that you are high risk.
WHY IS YOUR SCORE IMPORTANT?
Most lenders are not trained to read credit, they are not interested in reading items on your credit file one by one and deciding if they will give you credit based on those items. They prefer to have the scores which tells them if you are high risks or low risks. Your score has been calculated using the items on your credit report. The score tells your credit habits in a nutshell. In today’s computerized world most companies use a computerized system to obtain your credit score and instantly make a credit decision on you. The computer system cannot read the individual items on your report but it can access the score and make a decision. Depending on if you are high risk or low risk.
Your credit score could make or destroy you. It determines if you will be approved for a particular line of credit or service, it also determines the terms of your approval like your interest rates.
This is why it is very important for you to have a credit score than a credit file. The credit score is what creditors see, the file itemizes the reasons for the score. If you are in the market for any type of credit, it is highly recommended that you get a credit score so that you see what creditors are seeing. Your numbers tell you, if you are high or low risk.
HOW TO OBTAIN A CREDIT SCORE.
The government mandates the credit reporting agencies to give a free annual credit report to consumers at least once a year. The unfortunate thing, is that the free report does not come with a score. A report without a score is worthless to you because you cannot tell you where you rank. The credit reporting agencies are only mandated to give you the credit file. You are required to pay separately for the scores.
Our company does not only give you your credit file. We include the scores, giving you the benefit of knowing where you rank for free.