Credit Repair

Answers to the Most Common Questions About Credit Scores

Good credit can be important. How important? Moving from a “fair” credit score to a “very good” score might help you save over $45,000 according to a LendingTree analysis. Plus, there are the non-borrowing benefits to consider, such as potentially cheaper insurance premiums and fewer roadblocks if you need to rent a home.

Education can be a good first step on your path to improving your scores, and you may have questions about your credit scores and reports. Here are answers to some of the most common questions:

What is a credit score and why is it so important?

A credit score is a numerical representation of a person’s creditworthiness. Generally, a higher score indicates a person will be less likely to fall behind on a bill. As a result, creditors may offer people with higher credit scores the best rates and terms on loans, credit cards and other financial products. Your credit scores can also affect other areas of your life, such as your ability to rent a home and open a utility account without paying a security deposit.

How are my credit scores calculated?

Credit-scoring formulas (or models) calculate your score based on the information in one of your credit reports. There are different scoring models with different purposes, but many consumer credit scores attempt to determine the likelihood that someone will become at least 90 days late on one of their accounts within the next two years.

Based on a statistical analysis, the credit-scoring model reviews the information in your credit report and gives you a score within a predetermined range, often 300 to 850. Credit scores look at specific data points in your credit reports, such as whether you’ve made payments on time in the past (which can lead to a higher score), or if you currently have high balances on your credit cards (which could lower your score). A higher score is better, as it generally indicates you’re less likely to be late on a payment.

Who can see my credit scores?

Creditors that are allowed to request a copy of your credit report can also request a score based on that report. However, you might not know which score the company is going to use.

How frequently do my credit scores change?

In a sense, scores are potentially constantly changing. Data may be added or removed from your credit reports at any time. As a result, you might get a different result if you check a score today and tomorrow. Additionally, each scoring model uses a wide variety of information to determine your score. Even if nothing changes in your report, the passage of time can have an effect on your score.

What is a credit report?

Credit reports are the basis for consumer credit scores, and creditors may review your credit reports in addition to your scores when considering your application. Credit bureaus (the big three are Equifax, Experian and TransUnion) collect and organize information about consumers and use it to create credit reports.

What’s on my credit report?

Credit reports may contain your:

  • Name
  • Social Security number
  • Current and past addresses
  • Current and past employers
  • Bankruptcy filings
  • Record of your credit accounts, including loans, credit cards and lines of credit

Each account — called a tradeline — also has information associated with it, such as your current balance and whether you’ve made your payments on time. Negative information, such as late payments or collection accounts, must be removed from your credit report after seven to 10 years.

How can I check my credit reports?

You can request a free copy of your credit report from each of the big three credit bureaus on once every 12 months. Additionally, some companies may give you free access to your credit reports, or you can purchase copies of your reports directly from the credit bureaus. However, your report won’t necessarily come with a credit score.

Can I check my credit scores for free?

“They might be free to you, [but] credit scores are never free,” said Matt Listro, owner of Credit Admiral Software and organizer of the annual CreditCon conference. “Scores are generated by request only, so someone, or some company, must request and pay for a score.”

“Many companies have started sharing scores with consumers as a value-added service they are providing their customers,” said Listro. LendingTree has a list of the many free options for checking your scores. With a My LendingTree account, you can obtain a credit score based on your TransUnion credit report for free.

How do I dispute errors on my credit report?

If you’re reviewing one of your credit reports and notice information that doesn’t seem correct, or shouldn’t be on your report anymore, you can file a dispute with the credit bureau to get the information corrected or removed.

“There are three ways to dispute errors on your credit report: phone, mail and online,” said Listro. Each method should result in the same outcome — either the bureau confirming that your credit report is already correct or correcting the error.

How do I improve (or repair) my credit scores?

“With a few rare exceptions, increasing the number of positive accounts and/or decreasing the number of negative accounts increases your credit scores,” said Listro.

You can improve your scores by making on-time payments. If you’re new to credit or rebuilding credit, you may want to start with a secured loan or secured credit card.

Then, if there are negative marks on your credit report, you’ll want to make sure the associated accounts are completely accurate, verifiable and timely. A credit repair service may be able to help you understand when something shouldn’t be on your credit report.

“If an account is not 100% accurate, you have the right to ask for it to be either corrected or removed from your report,” said Listro. “Sometimes, having an inaccurate account-open date, credit limit, high balance, etc. can lead to the entire account being removed from your credit report.”

Additionally, if the creditor or collection agency can’t verify the account or information, the negative account may need to be removed from your reports.

“Lastly, an account must be timely,” said Listro. “With the exception of bankruptcies, all negative information can persist on a credit report for only seven years.” But sometimes the dates of a negative account get mixed up, and information stays on your reports for longer than it should. “Examine all negative information to see if it lines up with your own timelines,” suggested Listro.

Will checking my score hurt my scores?

No. Checking your score could result in a soft inquiry being added to your credit report. But soft inquiries are only visible to you and they don’t affect your credit scores.

Will carrying a balance help my credit scores?

No, generally, carrying a balance won’t help your credit scores. If you aren’t using your credit cards at all, having a small balance could be better for your scores than absolutely no activity, as using the card and paying off the balance can show creditors that you know how to responsibly use credit. However, generally, the lower your balance, the better.

You can also pay your credit card bill in full and still have a balance get reported to the bureaus. Card issuers generally report balances about the time when they send you your statement, which is often around 21 to 25 days before your bill is due.

Will closing a credit card hurt my scores?

Closing a credit card might hurt your credit scores because it can increase your utilization rate. Your utilization rate is a percentage measure of your current balances versus your available credit on revolving accounts, such as credit cards and lines of credit. A lower utilization rate is better for your scores. Because closing a credit card may decrease your overall available credit, it can increase your utilization rate, which might hurt your score.

Will rate-shopping hurt my scores?

Rate-shopping, when you compare your loan options from different creditors, might hurt your credit scores a little. However, it’s still a good idea and can help you save money when you’re taking out a loan.

Your scores can drop because a new hard inquiry may be added to your credit reports each time you apply for a loan. However, you can minimize the effect by submitting all your applications and completing your comparison shopping within 14 days. If you do, the credit-scoring models may consider all the hard inquiries as only one.

Does my income affect my scores?

Your income is not listed on your credit reports and does not affect your credit scores. Additionally, your title, job, race, religion, political party, gender, sexual orientation, national origin, marital status, citizenship status and any other information that’s not in your credit report won’t factor in to your credit scores.

Where can I learn more about credit scores?

FICO, one of the primary scoring companies, shares information about its scores on and has an active forum where you can ask questions. VantageScore, another scoring company, also has a consumer website with information and a newsletter.


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