What is a Credit Report?

A credit report is an accurate representation of an individual’s credit history. But to grasp the concept of credit reports better, you first need to have an initial understanding of what credit reports are. Your credit reports are based on metrics used to establish your current financial standing and credibility to institutions.

There are three credit reporting bureaus in the United States: Equifax, Experian, and TransUnion. These bureaus formulate your credit report on the basis of the data that is provided by the companies that you work with or work for.

Credit reports are associated with a specific fee that helps these bureaus make money. Large institutions pay these fees to obtain credit reports.  These reports are used to assess your ability to repay loans as well as your individual credibility.

Generally, various credit reporting companies report loan and payment transaction activity about their customers to the credit bureaus.    If you have made all your payments on time, this information will be reported as such to the credit bureaus.  If you are late on payments, typically more than thirty days late, this information will also be reported to the credit bureaus.  Some companies and other services can be lenient if you have contacted them and explained the reason and corrective action you are taking.

How credit reports work?

The question that stems from this subject is how do credit reports work? The more you have your financial liabilities in order, the higher your score. If you’re struggling such as being in debt or unable to pay the mortgage of your home, then you’re in a heap of trouble as your credit score would plummet down.

The standardized measuring unit of your credit score is your FICO score which was devised by a credit scoring firm initially known as Fair, Isaac and Company. The FICO score is calculated based on several different segments of your credit data. The data is extracted from five separate categories in variable ratios, payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%).

You might be wondering as to what might be the ideal FICO score and where you stand at this moment? In the US, a bad FICO score is around 550 or below where lenders consider you to be a potential risk whereas if you have a score that’s above 600 to 750, then it is considered to be an average score.

But if the score ranges from 750 to above 850+, then you’re actually above average and more towards an excellent score to begin with.

What benefits does it entail?

Maintaining your credit score entails numerous benefits such as it contributes to the development of your adult financial life. The details that are included in this report range from your current employment info, where you reside, whether there are any delays in your bill payments or if you’re involved in a lawsuit. This information creates an entire profile that can be provided to institutions on demand if they wish to analyze your entire life’s financial background instantly.

This not only makes it convenient for you to keep track of your credit score but also enables banks, employers, and other entities to freely gauge your credit limit and utilization rate. It helps if you’re looking forward to applying for a loan, credit card or any other credit-oriented product.

Things to Avoid:

There are endless possibilities that can bring your credit score down.  Debt tops the list as this is a burden that cannot be alleviated that easily.

Staying right on top of your payments is the ideal way to boost your credit score in no time. If you keep adding new debt and related required payments, then you are more likely to end up with a weak credit score. It is recommended to clear your debts and avoid any additional debts to improve your credit score. Savings are considered to be the perfect alternative to debts as debts can not only harm your credit score but also be associated with a hefty interest.

What is Credit Rent Boost?

Credit Rent Boost is a company that was founded on the principle that tenants can boost their credit score by timely rental payments and having those payments reported to the credit bureau. They rank among the top credit rent reporting firms and provide ongoing rent reporting,  past rent reporting, and past & ongoing reporting.

 

 

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