Challenge Week 1: Check your credit report!
It is really important to establish and maintain a strong credit history so that your credit score remains high. If you haven’t checked your credit report in the last 12 months, it’s easy to request a free copy from each of the three major credit reporting agencies in the U.S. by visiting annualcreditreport.com. While credit reports are free, you will have to pay a fee to obtain your actual credit score.
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What is a credit report?
A credit report is basically a record of all your credit activities. It includes things like your credit card accounts, loans, payment history and balances. It also contains information on any action taken against you for unpaid bills and inquires made by third parties such as a lender or insurance provider. It’s also a good way to find out if someone has stolen your identity. If you find an error(s) on your report, you will want to contact the credit reporting agency as soon as possible to get it corrected.
What is a credit score?
Credit scores are used to determine your credit worthiness and are used as an indicator of how much risk you are as a potential borrower. In other words, how likely it is that you will pay your bills on time and pay your loans back.
There are three major credit reporting agencies in the U.S.: Equifax, Experian and TransUnion. All three employ a complex scoring system know as FICO (short for Fair Isaac Corporation, the company that developed the scoring system). Each employs a slightly different weighting system, so your scores may not be identical, however in general, they should be in the same range. The scores run from a low of 300 to a high of 850, with the median about 720. Aim to keep your score about 700.