As part of our commitment to raising financial literacy in America, the FCAA and its members offer free financial education. That includes helping consumers understand their credit report and credit score.
Our member agencies have certified credit counselors who can walk you through your credit report and make recommendations for how to improve your score. You can start with the basics below – and then connect with a credit counselor if you want personalized credit report help.
A credit report is a detailed accounting of an individual’s credit history as prepared by a credit bureau or credit reporting agency. The data included in the report comes from financial information the credit bureaus collect from lenders, credit card companies and other financial companies. This information is used by lenders to determine how much of a credit risk an individual is.
From reading the credit report, lenders can tell if bills have been paid on time and how much outstanding debt a consumer has. This includes credit card debt, personal loans, car loans, mortgages, home equity loans, student loans, medical debt and, in some cases, buy-now-pay-later debt.
Your credit score is a three-digit number that credit scoring companies develop based on the information in your credit reports.
Even though a credit score is just a number, it tells a lot about the way an individual has handled their financial life. The more responsible you are with your use of credit and repayments, the better your credit score will be.
Higher credit scores tell potential lenders that an individual is less of a credit risk and more likely to repay future bills on time.
What does this mean for you, the consumer? Individuals with better credit scores could experience greater benefits than those with low scores.
If you have a high credit score, you may be offered:
High credit scores may also land you a job or put you at the top of the list for rental properties. Prospective employers and landlords may check your credit reports/scores before hiring or approving renters.
Remember to check your credit report annually to ensure there are no errors or fraudulent activity.
You are entitled to one free credit report every 12 months from each of the three major credit bureaus – Experian, TransUnion and Equifax. Visit www.annualcreditreport.com for a good place to start.
If you need credit report help, an FCAA member agency is ready to answer any questions you may have.
