Frequently Asked Questions
What is a credit report?
A credit report is a historical view of how you handle your finances. The information in your report is collected by the three major credit bureaus, Experian®, Equifax®, and TransUnion®. Each bureau may have different information on you, so reviewing all your reports often is important.
Your credit report tells lenders when you pay your bills, the amount of debt you’re carrying, and how long you’ve been carrying it. In addition to personal information like your name, Social Security number, and address, your credit report includes detailed information about your credit accounts and loans (i.e., personal and auto loans) such as:
- The date you opened your account
- Your credit limit and loan amounts
- The balance(s) you owe
- The amount of your repayment plan (monthly payments)
Lenders use your credit report to evaluate your financial behavior and determine whether to grant you credit.
What should I do if I find an error in my credit report?
If you discover something on one or more of your credit reports, you can file a dispute to have it investigated. You can submit your dispute online, by phone or mail with each credit bureau. When you file your dispute, share as much detail as possible about why the item is incorrect. Simply saying it’s “wrong” is not sufficient. Disputed item investigations can take up to 30 to 45 days to resolve. Click on the appropriate link below to open an online dispute claim at one or all of the credit bureaus.
How long does information stay on my credit report?
The answer to this question depends on the type of information. For example, late payments can stay on your report for seven years from the initial delinquency date. The following chart gives you an overview of the type of accounts on your credit report, and how long they stay on your file.
Type of Account Time Frame Open accounts in good standing Indefinitely Closed accounts in good standing 10 years Late or missed payments 7 years Collection accounts 7 years Chapter 7 bankruptcy 10 years Chapter 13 bankruptcy 7 years Credit inquiries 2 years
What is the difference between a hard inquiry and a soft inquiry?
Two types of inquiries occur when a lender of creditor ‘pulls’ your credit report to review your credit history. These inquiries are either hard or soft.
- A hard inquiry is triggered after you’ve applied for credit and a lender ‘pulls’ your report to review it as part of its decision-making process. Hard inquiries appear on your credit report and can influence your credit score.
- Hard inquiries stay on your credit report for a little over two years, but the longer they are on your report, their impact on your credit should be temporary and lessen over time.
- A soft inquiry is used to check their credit report. Product offers matching your credit criteria are presented to the consumer, resulting in better approval odds and higher conversion rates if they apply.
- Soft inquiries may or may not show up on your credit report, but they have no impact on your credit score.
What is a credit score, and how is it calculated?
A credit score is a three-digit-number a lender uses to help evaluate your financial behavior and determine how likely you are to repay a loan as agreed. They are also sometimes called risk scores.
There are different scoring models to suit specific types of loans, such as auto lending, credit card, and mortgage scores.
There are also many different scoring models. FICO® Score1 and VantageScore®2 are commonly recognized credit score models.
Different scoring models weigh various factors in determining your credit score. Those factors include:
- Your payment history
- Your utilization rate (the ratio of how much credit you owe vs. how much credit you have)
- How long you’ve had your accounts
- Your recent activity (credit you’ve applied for in recent months and how much)
- The type of credit you currently have (mortgages, auto loans, and other installment loans, such as student debt, which have fixed payments over a set period).
What are the different score ranges, and what do they mean?
Credit score ranges go from lowest to highest to help lenders evaluate the level of risk they face if they decide to do business with you.
A high credit score signals that you are a relatively low risk, while a low score indicates greater risk. Of two of the well-known credit score models lenders use, VantageScore® and FICO® Score, the score ranges go from 300 to 850.
The higher the credit score on any model, the greater chance you have of being eligible for a variety of loan offers.
For example, on the VantageScore range, 300-549 indicates a rating of “very poor,” while a range of 750-850 indicates an “excellent” rating.
What life events affect my credit score?
Several life events can impact your credit score. Here are five:
Home Purchase – When you apply for or borrow money to purchase a home, a hard inquiry goes on your credit report. The inquiry can decrease your score in the months following your approval. Still, it will likely recover quickly, especially if you consistently pay your new mortgage and other debts on time.
Getting Married – When you get married, your credit behavior impacts your spouse’s credit score and vice versa. You will continue to receive separate credit reports, but if you miss payments on joint credit accounts or loans, it will impact both of your credit scores.
Opening a Business – If you take out a loan to launch or maintain your business, you also take on risk if you fail to repay the loan on time, which can have a negative effect on your credit score.
Divorce – When you part ways with your spouse, if you’re connected financially on credit card accounts and loans, it can affect your credit score if one or both of you fails to continue making payments on time.
Retirement – It’s important to try to minimize your debt before you retire since your regular income will likely decrease. Retirees are uniquely vulnerable to identity theft and fraud, so checking your credit reports often to spot suspicious activity can help you protect your credit score.