The Credit Bureau, Your FICO Score and Your Credit Report

Every time you make a payment on your credit card, your home or your car it is reported to one of three agencies, which are called credit reporting agencies. These credit bureau companies are designed to provide a record of all your credit related activities. It is this credit report that is pulled every time you apply for credit and determines whether or not you are approved. It is also directly related to your FICO score. This is your credit score or the number used to determine the risk factor that a credit or lending company has when they lend to you. The higher the number the less risk to the credit companies when it comes to you defaulting on your loan or credit line.

You can think of your credit report or the credit bureau as a place where all the various lenders you borrow from report to compile all your information, which companies you have borrowed from, which debt you are paying on time, which you have been late on and so forth. All this information is sent to the credit bureau. When you go to apply for credit a query is made of one or all of the reporting agencies. Your credit along with your FICO score and all pertinent information including addresses where you have lived in the past 5-10 years is presented to the creditor making the query.

The information provided gives the creditor an overall look at your credit, from this they can determine your debt to income ratio and other factors that may come into play when deciding to lend you or extend you credit. This is why there is such a big fuss over credit reports and why everyone suggests that you check your report regularly to ensure that it reflects accurate information.

Your FICO score is the number, which is assigned to you based on the overall appearance of your credit. For example excellent credit, this means that you never miss a payment, always pay in full or pay more than the minimum balance, as well as ensuring that you do not exceed your debt income ratio may sit somewhere around 800. People with extremely poor credit, those who have charge offs, defaults, late or missed payments may see a credit score of 500 or even lower. The number may also change depending on the type of credit you are looking for. For example, the FICO score for mortgages is calculated differently than the scores for revolving credit such as credit cards. This is something important to remember when you are looking at your credit score. You might be significantly lower or higher based on the way the scores are calculated. There are number of different factors that go into the scores which is why the numbers can change drastically depending on what is counted and what is not in the score.

The reporting agencies and the credit bureau in an effort to make it easier to keep a track on your credit and your credit score allow you to obtain one free copy of your report every year. This allows you to check what is being reported to the credit agencies and make sure that everything is being reported correctly. Each time a query is made you usually can obtain a free copy as well in order to find out exactly what was reported to the company. When a company refuses credit it usually lists the reason why such as too much delinquency or too much debt. Obtaining a copy of your credit report can tell you what they were looking at when they made the decision.

This can allow you to find issues with your credit and make changes because you know exactly what is on your credit report. For example, say that you make payments on time but they were reported as late or alternatively, you paid off a debt in full but it is still listed on your report. These types of errors and differences are common. They normally occur because the company you have the credit with reports at different times. Some report at 30 day, some at 60 and some at 90 days. There are others that may report every week or only every 6 months. This can cause issues when debts being paid or payments made and not accurately reported.

In order to avoid this, especially with settlements, consider requesting that the company report it immediately to the credit bureau. This will help to remove these types of discrepancies. To avoid late payments being marked on your account make sure to mail bills out as soon as you receive them or a minimum of approximately 10 business days prior to when the bill is due. This will allow the company to process your payments before the due date. These types of things are what are reported and listed on your credit report and the things you need to look for when you obtain your credit report from one of the reporting agencies.

Your credit report and credit score are important when it comes to obtaining credit and keeping track of the credit, you do have. Your credit report is the repository that contains all the information on your credit history. This usually goes back about ten years and lists everything from credit cards to car payments to medical bills. Student loans and other forms of debt will also appear on your credit history. The FICO score is the numerical representation of your debt. This includes the sum of all your debt including your debt to income ratio, late payments, delinquencies and charge offs. It also reflects things such as debt that has been paid off and how much risk you pose when it comes to lending or extending credit. The government allows one free credit report per year in order to facilitate making sure that information is accurate and up to date making it easy for you to manage your credit history.