What does the average person know about Credit Reports? How about the Credit Bureaus themselves? I am going to give you a small taste of some information that may help you. Let’s start at the beginning. Who teaches us about Credit and where does that information come from?
No one is obligated to teach us or our children. Any accredited classes that are offered are college level. After mistakes can be made and dig a deep hole into your Credit Reports before you know what it is. Not to mention the fact that many people decide not to go to college and pursue trade or military based careers. Therefore, it is expected to be the guardian’s responsibility to teach financial education. That is going to be limited based on what those people know.
In the beginning.
Your Credit legally starts at the age of 18. The reason for this is that minors (under 18) cannot legally enter into a contract without an adult guardian to be included. (There are rare exceptions to this, but we won’t go into that now). If there is anything on your Credit Reports date prior to your 18th birthday you can dispute it with the Credit bureaus and have the record removed. However, if you are added to a credit card or an installment account prior to your 18th birthday and it was in good standing you can leave this one your credit. It will help build your credit.
Most of us weren’t that lucky. So, when you start after your 18th birthday you start with no credit. Having no credit is not a good thing. No credit can be just as bad as bad credit. There are several variables that affect your Credit. So many, in fact, that I couldn’t touch each one within this one blog.
Variables of Credit Reports
As I said there are many variables, but we will touch on the major ones that will affect your report.
Number of Good Standing Accounts
Believe it or not, having multiple good accounts will help your credit. At least 11 accounts will have a good impact. These should include credit cards, auto loans, mortgages and personal loans. Other account can count toward this number, but these are the major ones.
Collection Accounts
Collection accounts are accounts that have not received payment and/or communication on payment. These accounts are sold to collection companies and reported to the credit bureaus. These accounts can stay on you report for 7 to 10 years.
Now this section is important. There are multiple theories about collections and how they affect your credit. My knowledge is from personal experience and research I did to help myself. Collections do affect your credit score but may not always improve your credit score. The thing about paying off collections is that they normally affect you when you are looking to rent, buy a car, or get a mortgage. When you are doing these things you “score” is not what the lender is looking at. If you are looking to rent, they will look to see if you have any utilities or other rental companies in collections. When buying a car, they look at if you have or had an auto loan in the past and if the payment were on time. They will also look to see if you have any late payments on any other accounts.
Disputes for Credit Reports
You can dispute collection accounts and have them removed. Agencies that post accounts to collections are required to have specific documentation of the accounts and correct information on you. If they cannot provide these within a certain time frame the credit bureaus will remove it from your report. There are companies that will ask you to pay them to remove collection account on your report. Please do not use or encourage them to take you money for this simple task. They cannot guarantee you that accounts will be removed. All that they do is send the credit bureaus letters on your behalf to dispute the accounts.
If you want to know what are credit reports and how to fix your credit report now, check out the credit repair magic system.
Credit Repair Magic
There are several ways you can dispute accounts. One is you can send a letter to the credit bureaus with the following:
- Account you are disputing
- Reason you are disputing
- And verification of your identity
- You can dispute an account online with each credit bureau.
The third way is to use a third party that does not charge you. For example, I used Credit Karma. You do not have to pay for an account and you can easily select what and why you want to dispute an account. They will send you updates on your dispute.
Number of Hard Inquiries on Credit Reports
Hard inquiries are when a lender pulls your credit for an application of a credit card, auto loan, mortgage and other accounts. These can stay on your report for up to 2 years. Having more than 8 inquiries on your reports will negatively affect your credit score.
Credit card Utilization
Your credit utilization strongly affects your score. This is the percentage of credit that is used from the credit you have available to you. As an example, if you have credit cards that equal up to $2,000 and your current balance on those add up to $1,000 that means your utilization is at 50%. The best and ideal amount to keep your utilization at is 30%. In this example that is $600. As it goes higher it decreases your score and looks bad to lenders.
Age of Credit
The age of your credit is hardest to make better. This is the average age of your accounts on your credit reports. The best way to battle this is to open 1 or 2 credit cards and keep them open. If you close them they will not increase in age.
Age of Credit affect young adults the most. Because they are discriminated based on being new to credit.
How these variables affect your credit score depend on the type of score you are looking at. (Vantage score, FICO score and many more).
If you enjoyed this article and feel it has helped you in any kind of way, please comment down below. Also feel free to reach out to me or visit my site sfacademy.us
