Credit Report Scores
In order to understand your credit score, you need to learn how to identify and interpret the major components of your credit report.
In addition to your name, address and Social Security number your credit report lists the following information about you:
• Your credit accounts – Sometimes called “trade lines†this information includes any loans, credit card accounts and any other kinds of lender accounts you have opened. Typically, the type of account, the date you opened it, your balances and the details of your payment history are listed in a trade line.
• Requests for your credit – These are called credit inquiries. There are basically two types of credit inquiries, - those that are generated by you every time you apply for credit and allow the lender to look at your credit history and inquiries that you did not initiate. Credit inquiries that you did not initiate are called “soft inquiries†and do not affect your credit score.
• Public records and collections – This is a list of collection accounts, bankruptcies, tax liens, foreclosures, wage garnishments, lawsuits and judgments. These are garnered from state and county courthouses.
This data, which is mainly reported from lenders or collection agencies, is collected, stored and updated by credit bureaus. It is important to remember that credit bureaus are private for-profit companies and that their business is about selling information about you to lenders. This is why an account that’s listed on one credit bureau’s report might not show up on another or account balances might differ from bureau to bureau. Each credit bureau is in business for itself and competing with others.
As the three big three credit bureaus are in business competition with each other not all lenders report information to all three bureaus. The kicker with this system of course is that your credit card score differs on each pulled credit report.
If a lender pulls scores from all three bureaus they can see a score that can be as different 30 points in each which of course could make a big difference between a score that grants you a good interest rate (730) or a score that grants you a sub prime rate (600).
The good news is that anything that is a positive credit comment on your credit report stays on there forever. Anything that is negative, such as late payments, collection actions and foreclosures must be removed after seven years.
Bankruptcies take a very long time to be removed from a credit report. They may be removed after ten years in the United States, seven years in Canada. Hard inquiries made into your account after you request a credit card are deleted after two years.