Credit Reports

Your credit report has information that affects whether you can get a loan - and how much you will have to pay to borrow money. Lenders can look at your credit report from any or all three major credit reporting agencies.

You should get a copy of your credit report to:

* make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.

* help guard against identity theft. That's when someone uses your personal information - like your name, your Social Security number, or your credit card number - to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don't pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.

Credit scoring is a system creditors use to help determine whether to give you credit.

Information about you and your credit experiences, such as your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report. Using a statistical program, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points - your credit score - helps predict how creditworthy you are (ie. how likely it is that you will repay a loan and make the payments when due).

To improve your credit score, concentrate on paying your bills on time, paying outstanding balances, and not taking on new debt. It's likely to take some time to improve your credit score significantly.

Because your credit report is an important part of many credit scoring systems, it is very important to make sure it's accurate before you submit a credit application.