Understanding Your Credit Report
We all know what a credit report is. Unless you’ve been living off the grid, each one of us has a financial report compiled by the credit bureaus. But do we know what those three numbers of our credit score actually mean? If you don’t, worry not; we’ll break it down for you.
Understanding Your Credit Report
Before we get into the nitty-gritty of a credit report, we would like to touch upon why understanding your financial report is important. The reason remains that it helps you gain a better, more complete perspective of your financial health. But that’s not all. People who are familiar with the whys and hows of their report are better at managing their wealth and making smarter decisions.
Two Kinds of Credit Scores
The first thing that you need to know is that there are two kinds of credit scores. Surprised? Well, the average person definitely is. We assume, albeit incorrectly, that the score that reflects on our report is the only number considered by lending agencies. There is, in fact, a general score and a customized score:
- General Score
This is the score used by the lending groups. They are used by the agencies to gauge whether you are worth the risk. Money, after all, is serious business. The term general is used to describe the score as the same formula is applied to generate the score across all credit bureaus.
- Customized Credit Score
This is where things get a little interesting. In this case, not only the credit score, but other information such as account history are used to generate a specific score. No two lending agencies will generate the same score because the information will be specific to their particular agency. That is why it is called a customized score. It comes into play when you apply for a mortgage or an auto loan.
Important Factors
Your credit score is affected by a few important factors. Knowing them will enable you to manage your financial health more effectively. They include:
- Number of late payments
- The various types of credit accounts
- Age of accounts
- The total debt accrued
Better Money Management
A thorough knowledge of what your credit report consists and what affects it helps you to make better decisions and be better prepared in case of a financial emergency.
If you plan on taking control of your finances, you need to understand the fundamental facts of credit. Are you looking for the best information about credit? Are you considering credit repair? We can help. At Action Credit Repair, our experts will provide a personalized credit consultation, an audit of your credit history, and offer solutions to all of your credit obstacles. Contact us today to speak with an experienced professional: Call 518-945-2299 or email [email protected].