Credit
Understanding your credit
Know what's being reported before trying to “fix” it
10 min workbook
Why this matters
Credit is one of the most misunderstood parts of financial life, partly because so much advice about it is sold rather than explained.
Before trying to improve anything, it helps to see exactly what is being reported about you and who is reporting it.
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Credit report vs. credit score
- Credit report
- Information reported about your credit history.
- Credit score
- A numerical assessment produced from information in a credit file using a particular scoring model.
The three nationwide credit reporting companies are Equifax, Experian and TransUnion.
You may encounter different scores in different places because different scoring models and versions exist, and different data may be used. Two widely used families of models are FICO and VantageScore.
No single number you see is universally “your credit score.” Lenders may use different models depending on the lending decision.
Review before repair
Read each report carefully, section by section.
- Identifying information
- Open accounts
- Balances
- Payment history
- Late payments
- Collections
- Inquiries
- Unfamiliar accounts
The official free source for your reports from all three nationwide credit reporting companies is AnnualCreditReport.com.
If something is wrong
Inaccurate information can be disputed. Consumers generally should address inaccuracies with the credit reporting company and with the company that furnished the information.
Accurate negative information generally cannot simply be removed because someone dislikes it.
Credit improvement starts with understanding
Factors scoring models commonly consider
- Payment history
- Balances and utilization
- Age and length of credit history
- New credit activity
- Account mix
No one can promise a specific point increase. Be cautious with any service that does.
What you've heard vs. what you should know
What you've heard
“Checking my own credit hurts my credit.”
What you should know
Reviewing your own report or monitoring your own credit is treated differently from a lender's hard inquiry made in connection with an application. The specifics can vary by model, so read what your report says about inquiries.
What you've heard
“There's only one credit score.”
What you should know
There are multiple scoring models and multiple versions of each.
What you've heard
“I can dispute anything negative and have it removed.”
What you should know
Disputes are for information believed to be inaccurate or otherwise improperly reported — not a mechanism for deleting accurate information.
Credit review worksheet
Work through this while looking at your reports
What I found
Start here
Review all three credit reports at AnnualCreditReport.com.
Read them before you change anything. What you find determines what's actually worth doing.
30-day WORKWELL challenge
0 of 7Choose one credit factor to understand and address, instead of trying to fix everything at once.
Reflection
Your next step
Credit sits underneath borrowing of every kind, so what you learn here carries into home buying, debt and insurance costs.
Bring any question you couldn't answer from your reports and we can talk it through.