smartconsumer: Knowing About Your Credit History - Know

Knowing About Your Credit History

{What to Know} {What to Do}


Your credit history describes how you use money. It includes things like:

  • How many credit cards you have

  • How many loans you have

  • If you pay your bills on time

If you have a credit card or a loan from a bank, you already have a credit history. Companies collect information about your loans and credit cards. Companies also collect information about how you pay your bills. They put this information together in one place. This is called your credit report.

Your credit report is a summary of your credit history. It lists information including:

  • your name, address, and Social Security number

  • your credit cards

  • your loans

  • how much money you owe

  • if you pay your bills on time or late

  • if you ever filed for bankruptcy

Why credit reports are important

Businesses want to know about you before they lend you money. Would you rather lend money to someone who pays bills on time or to someone who always pays late? Would you lend money to someone who already owes a lot of money to someone else?

Businesses look at your credit report to learn about you. They decide if they want to lend you money or to give you a credit card. Sometimes employers look at your credit report when you apply for a job. Cell phone companies and insurance companies look at your credit report, too. Even landlords may ask to see your credit report before renting to you.

The business uses the information in your credit report to decide whether to give you a loan, a credit card, a job, or insurance. The business also uses the information in your credit report to determine how much interest it will charge you. If your credit is excellent, you will get the best rate on a loan. If your credit is bad you will not get a loan or you will pay a high interest rate if you get the loan.

Who prepares your credit report

A “credit reporting company” collects your information. There are three big credit reporting companies:

  • TransUnion

  • Equifax

  • Experian

Each of these three companies writes and keeps a report about you. Each report might be slightly different, depending on the information the company collected.

How to see your credit report

You can get a free copy of your credit report every year. That means one copy from each of the three companies that writes your reports. The law says you can get your free credit reports if you:

There may be other websites that claim to offer free credit reports. That is probably not true. Those sites may be offering things that will cost money.

Credit reports are not the same as credit scores

A credit score is a number based on your credit history. The credit score does not come with your free credit report unless you pay for it.

A high credit score means you have good credit. A low credit score means you have bad credit. Different companies have different scores. Low scores are around 300. High scores are around 700-850.

There are different credit scoring systems. Each credit reporting company creates their own credit score. Other companies create scores, too.

It is nice to know your credit score. But it does cost money. Since your credit score is based on your credit history, if you know your history is good, you know your score will be good.

Be careful getting your credit score

Companies might tell you that the score is free, but they will try to sell you something else. If you look closely, you might find that you signed up for a service that checks your credit for you. That service is called credit monitoring, and you will be charged for it every month.

Before you pay to get your credit score, ask yourself if you need to see it. It might be interesting. But is it worth paying money for?

Content Last Modified on 2/13/2013 11:31:46 AM