Understanding what's on your credit report is key to managing your credit rating. When you know where a credit score comes from and how it can affect you, you have the basic tools to better control your financial health.
Every month, each of your lenders (for example, your bank, landlord or department store) reports your recent credit history to one or all 3 of the major credit bureaus—Experian, Equifax and TransUnion. The bureaus then compile and save these reports to determine your credit rating. Some credit rating information that may appear on your credit report includes:
When you apply for credit, a lender will consider both your credit rating and your credit history to help assess the likelihood you will make your payments on time. Since a higher credit rating represents a lower risk to the lender, they are typically more likely to lend their money and offer lower interest rates to borrowers with higher credit scores.
Your credit rating is most influenced by how timely your payments are and how much debt you have. The 2 most important things you can do to maintain a good credit rating are:
1. Pay at least the total minimum monthly payment by or before the payment due date every month. A history of on-time payments is one of the best things you can do for your credit.
2. Maintaining a high credit card balance may reflect a higher risk to lenders. You can increase your credit rating by maintaining a balance that is 20% or less of the overall credit card limit.
You are legally entitled to a free credit report every 12 months from one of the 3 major bureaus. Make sure to request a copy of your credit report at least once a year to stay informed about what your creditors are saying about you.