|
|
Credit Score
The Building BlocksBecause your score is constructed from the information in your credit report,it's worth looking at what you'll find there. In addition to identifying information about you-your name, address,and Social Security number-your report lists the following: Your credit accounts-Sometimes called "trade lines," these include loans, credit cards, and other credit accounts you've opened. Your report lists the type of account, how long ago you opened it, your balances, and details of your payment history. Requests for your credit-These are known as "inquiries" and there are basically two kinds. When you apply for credit,you authorize the lender to view your credit history. This is known as a "hard inquiry" and can affect your credit score. You might also see inquiries that you didn't initiate. These "soft inquiries" are typically made when a lender orders your credit report to make you a preapproved credit offer. Such marketing efforts don't affect your score. Public records and collections-These can include collection accounts, bankruptcies, tax liens, foreclosures, wage garnishments, lawsuits, and judgments. Public records are culled from state and county courthouses. Lenders or collection agencies report most of the other information in your report.This data is collected, stored, and updated by credit bureaus, which are private, for-profit companies. The three major credit bureaus are Equifax, Experian (formerly known as TRW), and Trans Union, and their business is selling information about you to lenders. Because they're competitors, the bureaus typically don't share infonnation, and not all lenders report infonnation to all three bureaus. In fact, if you get copies of your credit reports from the bureaus on the same day, you're likely to notice at least a few differences among them. An account that's listed on one credit bureau's report might not show up on the others, for example, or the balances showing on your various accounts might differ from bureau to bureau. Because your score is based on the information that's in your report at a given credit bureau, the number differs depending on which bureau's credit report is used. Also, each time you or a lender "pulls" your score (in other words, orders a score to be calculated), it's likely to be at least somewhat different, because the infomation on which it's based probably has changed. Fair Isaac says most people's scores don't change all that much in a short period, but about 25 percent of consumers can expect to see their scores at a single bureau vary by more than 20 points over a three-month stretch. There also are time limits to what can appear on your credit report. Although positive information can appear indefinitely, negative marks-late payments, collection actions, and foreclosures-by federal law generally must be removed after seven years. Bankruptcies can be reported for 10 years. Inquiries should be deleted in two years. |
|
