Keys to Unlocking Your Credit Report

So you know your credit score but have you ever wondered what your credit report actually says about you? What that lovely three-digit number indicates to everyone who sees it? For all of those who have heard that guy singing "Credit Report.com, baby!" but still don't know what comprises their credit report, here are the facts.

A credit report serves as a snapshot of you and your credit history. Lenders use it to determine your risk level as a borrower. A stellar credit score indicates that you have stayed current with payments, haven't defaulted and that altogether, you can handle your debt in a responsible manner.

The Credit Bureaus

There are three credit bureaus that monitor your credit activity and through this attention, assign you a credit score. Experian, TransUnion and Equifax are private companies who receive your information from a wide range of sources including banks, mortgage companies, department stores and anywhere else you may have credit. All of your credit activity is monitored in order for these three monoliths to judge you as a poor or excellent borrower.

Facts about credit scores

There are a handful of ways to calculate a credit score but the FICO analysis is the most common. On the FICO spectrum, credit scores can go as low as 300 and as high as 850. A good score is in the 620-650 range. Poor credit behavior such as defaults, late payments and filing for bankruptcy can all contribute to a less than desirable score.

How can you increase your credit score?

The simple answer is by being an awesome borrower that makes creditors smile with glee. But as we all know, awesome or not, credit can be a tricky, slippery slope to maneuver.

The best way to improve your credit score is through "good credit behavior." Think of it as getting a bunch of gold stars over the course of 1st grade and by the end of the year, you have an A+ in the class. If you make payments on time, pay more than the minimum monthly amount and maintain a good relationship with your creditors, your score is likely to go up.

On the other hand, if you default on payments, move without notifying lenders of your change of address or avoid their calls altogether, your behavior will likely warrant a drop in your FICO score. If you act like a high credit risk, you leave an imprint on your score that will follow you as you try to buy a car, put a down payment on a house or even finance your new washing machine.

Unlocking your report

The key to unlocking your credit report is through understanding what goes into it and just how serious a profile it is. This is a number that acts as a snapshot of your credit history. With careful consideration and planning, you can improve your score by lowering your credit risk and thereby increasing your credit worth. Remember, it's your credit activity, your imprint and your credit report.