How to Get Free Credit Reports, and what are your 'Credit Score' Factors


Your credit history goes with you everywhere
Your credit report (or credit history) is a major factor when lenders decide whether your application will be approved, and along with your credit score (a three-digit scale from 300 to 850), helps determine how much interest you'll pay. Obtaining this beforehand lets you discover any errors, which, once corrected, can improve your credit rating very quickly.

What are the credit score factors, and how are they weighted? The most common method goes something like this: 35% is based on your payment history (late payments, etc). 30% of the score is based on outstanding debt (how much you owe). 15% is based on the length of time you've had established credit. 10% is based on new credit (opening new credit accounts will hurt your score for a short time -- this factor also penalizes "hard inquiries" on your credit in the past year, where you've granted lenders permission, as opposed to "soft inquiries," which include looking at your own score, which have no effect; however, several hard inquiries within a short period are considered as one, as consumers must comparison-shop for the best credit deals possible). 10% is based on the types of credit you currently have (a mix ofdifferent types, such as revolving credit accounts and installment loans, can be a plus).

Getting your credit report early (so you can correct errors or repair damage) before applying for a mortgage, loan or other financial product, makes sense, because when you apply for any type of credit, it is recorded on your credit history (a "hard hit"), regardless of whether your application is approved. The more hard hits, the worse. Also, many insurance companies and even landlords may examine your credit history when determining approvals and/or rates.

If your report is in front of you before making any application you will be able to judge, based upon a consultation with the lender, your chances of being approved or not and therefore avoid any unnecessary damage to your credit score. A good credit score is important because you can then obtain lower interest rates, better terms and a much wider choice when it comes to choosing lenders.

You are entitled by law to a free credit report every twelve months from each of the three credit bureaus; Experian, Transunion and Equifax, which you can apply for by regular mail or online at the respective websites. And you can get a free credit report & score online from many services, typically with a trial of credit monitoring -- something to consider in this age of identity theft.

When obtaining your reports, one good idea is to stagger each application by four months; in doing so you'll have an updated report about every sixteen weeks. Be aware however that each credit bureau may hold slightly different information about you, so if you don't see something on your newest report that was on a previous report, that doesn't necessarily mean it has been removed.

There are ways on how to improve your credit score -- fast. For starters, pay down your credit card debt, use your cards sparingly, make at least occasional use of your oldest cards (age of credit), and make sure your credit issuer is accurately reporting your limit (ratio of used/unused credit). And remember, every time you seek out more credit (a common temptation to handle financial strain), that application is a hard hit on your credit score -- which worsens the vicious cycle.

Finally, when you apply for credit always ask the lender which of the three credit bureaus they use when checking the credit records of potential customers. If your credit history with one of the three bureaus is in better shape than with the other two, it may be wise to seek a lender who uses that specific bureau when performing their credit checks. The sooner you get your credit report and credit score in front of you, the better. Good luck!



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The article above should is not intended to replace the services of a financial adviser; its sole purpose is to provide information about obtaining a free credit repot, your credt histroy, or credit score and helps answer questions such as to how credit score is calculated or computed, how to check my credit score, how to improve credit score, ways to improve credit rating, and what are credit scroe factors or credit rating factors?.