Introduction to Credit
Your credit history is included in your credit report. Reporting agencies, credit bureaus, use this information and their proprietary formulas to create for you a credit score. This is a numerical value that determines the risk you provide in lending you money, renting you a place to live or even determining if you are a reliable employee. Your credit score can dramatically impact your financial goals. Paying attention to your credit might be one of the biggest impact items to financial future.
We will explore all aspects of your credit, but I would like to begin with understanding what the main components of your credit report are. There are five main parts to your credit report:
- Personal Information – this includes your name, address, social security number, date of birth and employment information.
- Trade Lines – this includes your credit accounts. This will have the open date of the account, account type, your credit limit, current balance and payment history.
- Public Records – this includes any public information from the court system. These can include bankruptcies, liens, judgments, garnishments, etc.
- Collections – this includes information on bad debt from collection agencies.
- Inquiries – this includes a list of everyone you have given permission to review your credit report when applying for credit. It will also include anyone that has viewed your report for pre-approved credit offers you receive through the mail. This shows the history of inquiries for the past two years.
It is important that you know what is in your credit report and how your credit score is affected by what is in your credit report.
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