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Phoenix Forward

5 things you need to know about credit reports

Understanding credit is essential

You probably know your GPA, but do you know about your credit score and what’s in your credit reports? Here are five things you can do to take control of this important area:

1

Check your reports annually.

If you’ve used credit in any form — credit cards, student loans, auto loans — there’s a report about it. “Think of your credit report as your academic transcript for credit,” explains Chris Conway, a personal finance expert and member of the University of Phoenix repayment management team.

TransUnion, Equifax and Experian are the three major credit reporting bureaus, and Conway recommends checking them all.

“You can request free copies of all your reports once a year,” Conway explains. “All three bureaus report a little differently, so familiarize yourself with each report format.” AnnualCreditReport.com provides information on obtaining the reports if you need help.

2

Know your standing.

Your credit score — sometimes called your FICO® score — is different than your credit report and is based on factors such as how much of your available credit you use, how many years you’ve been in the credit market, your number of open accounts and your repayment history.

“Think of your credit score as your credit GPA,” Conway says, a snapshot of how you’ve managed your borrowing history. Credit scores range from 300 to 850 — the higher, the better. High scores can get you the best loan interest rates; low scores can block credit access or cost you jobs.

The median U.S. credit score is currently 711; anything higher than 720 is considered “good” for the purposes of obtaining credit, Conway says. You can obtain information regarding your credit score for a fee at websites such as myFICO.

3

Dispute mistakes.

One reason to check credit reports annually is to look for errors, Conway stresses. “Up to 20 percent of credit reports contain mistakes,” she says, ranging from simple clerical errors to identity theft issues. If you find errors, you can file online disputes.

Another reason to monitor your reports is to track your open credit accounts, according to Misty Myre, also on the University repayment team. “We once counseled a student with $150,000 in loan debt she didn’t know about,” Myre says. “If she’d checked her credit report, she’d have seen those accounts a lot sooner.”

4

Guard personal details.

Identity theft can wreck your credit, so secure your personal identification information at all times, and beware of “phishing” and other online scams designed to steal your information.

If you suspect you are a victim of identity theft, contact the police and file fraud reports with the three major credit bureaus. The Federal Trade Commission offers consumer guidelines on how to do this.

5

Be cautious with your credit.

How you use credit makes up almost two-thirds of your credit score, so use it wisely, Conway urges. “The best way to increase your credit score is to use no more than 30 percent of the credit you have available to you,” she says, “and always pay your bills on time.”


FICO and myFICO are registered trademarks of Fair Isaac Corp.

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