FREE Credit Reports

One of the most common questions asked on credit repair is actually how to fix credit. Well, the most essential tool and piece of information to assist in doing this is the credit report which will detail your credit score. Armed with this piece of information you will have the same data that the lenders will have when making decisions on whether to give you credit, how much, and at what rate. You will be able to examine the report and ensure whether the information held on record is a true and fair representation of your financial situation. Mistakes and errors are not uncommon which is why it is vital that you obtain a credit report and check it thoroughly.

There are several different credit bureaus each of whom will use different criteria and scoring models for determining the credit score – this means that at any one time a person may have several different credit scores simultaneously. Most lenders use one of the “big” three bureaus – Experian, Equifax and TransUnion, who in turn will use differing systems to access credit worthiness.

The most common is the FICO, used by a majority of bureaus and lenders; others include NextGen, VantageScore and CE who make up the rest. It is therefore recommended that when looking at your credit report you obtain one from each of the three different bureaus to make sure that the information is correct across all data.

So what is a credit report or credit score? A credit score in the United States (and most other countries) is a number representing the creditworthiness of a person. It will detail all aspects of a person’s financial history – payment history, credit utilization, length of credit history, type of credit and recent searches/credit obtained – each of these criteria given a weighting towards the overall figure. By looking at these scores lenders are supposed to be able to measure the risk of default and from this accept or reject credit applications and assess the rate of interest. Late payments, arrears, defaults will all count against a good score.

But let us not forget the purpose of the Credit Score – it is about making the bank profit at the lowest acceptable risk. Even people with perfect credit scores can be rejected simply because the transaction will not make the bank enough money. The scoring process is about profit not risk – banks accept customers for their own requirements, not the reverse. Risk of course plays a part – clients unlikely to repay are a threat to profits. Yet even the solvent may be rejected if they’re unlikely to generate profit for lenders.

The current financial turmoil has only magnified this, therefore we need to understand banks are there to make money, not help us.

It’s about weeding out unprofitable customers.

So, to recap, order copies of your credit files from the 3 different Credit Agencies. Once you’ve got them be diligent – check the accuracy of the info that banks are judging you on. As we’re talking billions of pieces of data, there are always mistakes. Lots of costly mistakes….

Check EVERYTHING! One apparently minor mistake can be a hammer-blow to credit applications

Are all your debts correctly listed? Are there any inaccuracies on your repayment history?

Yet other details are important too. Check your present and past address details. Errors here can lead to you being judged on someone else’s credit history. Also, your finances may be incorrectly linked with someone else’s. Focus especially on any currently active accounts. If they’re still open, even if you haven’t used them for years, it can cause problems.

Any errors?

Follow our step by step guide on how to repair your credit.