Credit Report and Credit Scores

Check your credit report and credit score BEFORE applying or shopping for a loan! What’s on the report can greatly affect the interest rate and your ability to obtain a loan so this is an important step even if you are not ready to buy a house just yet.

We wish we knew more about credit reports and credit scores back in our college days!

Even after you cancel or close an account, the record remains in your credit report for another 7 to 10 years.

So do not open new accounts unnecessarily.

There are 3 major credit reporting agencies: Experian, Equifax and TransUnion. Everyone has 3 FICO credit scores, one from each of the agency.

A FICO score is calculated from a mathematical equation using software developed by Fair Issacs Corporation (thus the name FICO).

The 5 main areas that contribute to your credit score are:
Payment History - have you been paying all your bills on time? Late payments will hurt your credit score.
Amounts owed – do you owe a lot of money on each account?
Length of credit history – how long have the accounts been opened? The longer, the better.
New Credit – how many new accounts do you have?
Types of Credit in use – do you have a mix of accounts?

Generally, lenders consider credit scores of 720 and above as excellent and you will get the best interest rates. Scores of 680 to 719 is considered good and you will get the next best rates and so forth.

Errors on the credit report are NOT uncommon. We have found errors on our credit reports as well. If you find an error on the report, notify the credit agency immediately in writing.

Specify clearly what the error is: account name, account number and what the error is (whether there was never a late payment or the account has been closed or you don’t have that account!).

The agencies are required to investigate and respond to you within 30 days. If the error is complicated, it might take longer than that to remove the error but at least they will be looking into it. That is why it is so important to check your credit report before you enter the home buying process.

If your credit score is not great, it also allows you time to improve your score.


• Pay your bills on time
• Pay off your balances if you can or at least reduce them as much as possible
• If you already have many accounts, do not apply for any more credit! Just say NO to all those credit card offers you get in the mail!

If you have many accounts but they are well-established (you’ve had them for many years), do NOT cancel those accounts. These established accounts affect your FICO score in a good way.

Where to check your credit report? You can actually go to the individual agencies’ website and get your report from them. Another option is www.myfico.com where you can get all three credit reports and scores.
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Word of Caution: The information stated on this website is for general information purposes only. The subject of taxation is complicated and should be discussed with your legal tax counsel. We are not tax experts nor do we claim to be. The tax laws change frequently and must be referred to prior to entering into any sales contract. Please consult with your tax specialist before entering into any binding sales contract.