If you have ever received your credit report, then you know that it can be difficult to make heads or tails of it. There are a few easy ways to understand exactly what you are looking at, but there are a few things that you should remember. First of all, the credit score is probably the most important aspect of the entire credit report. This is the first thing that any potential creditor will see when you are attempting to make a purchase. The score can read between 300 and 850, with 300 being a very poor credit rating, and 850 being a perfect credit score. Most credit scores will fall between 400 and 750.
A credit scoring of 680 to 700 is considered an excellent score. Higher credit scores will possibly grant you preferential treatment from potential lenders, and will likely earn you lower interest rates on any new loans. You are considered a very low credit risk when you carry credit scores this high, because it is obvious to lenders that you take your finances seriously and pay all bills on time.
There are three different credit reporting bureaus: Equifax, Experian, and TransUnion. Many lenders will only refer to one credit bureau, which means that any inquiries and approvals will appear only on that particular credit bureau’s report. Larger purchases, such as auto and mortgage loans, will search all three credit bureaus for a more accurate picture of your credit history.
Every creditor on your report will state your payment history. If you find any errors, you may dispute them. The creditor’s phone number should always be readily available on the credit report to make disputing errors easier for you. Do not hesitate to report any errors on your credit report, because it could make a difference of twenty to one hundred points in your credit score.
If your score is lower than you expected, there are several things that you can do to improve it. There are no quick fixes, however. You must be prepared to make all of your bill payments on time. Keep low balances on your credit cards, but do not cancel any of the accounts. Contact creditors if you feel you may need to submit a late payment, because this will often keep the creditor from reporting you to the credit bureaus. In time, you will see your credit scores rising, which will open more doors for you in the future.