Understanding Credit Reports
Positive and Negative Credit History
Positive = Low-risk
• Pay bills consistently and on time
• Maintain reasonable amounts of unused credit
• Apply for credit only when needed.
This keeps inquiries to a minimum
• Check credit reports annually and correct any errors that hurt the report
Negative = High-risk
• Routinely paying late on credit cards, utilities, and cell phone bills
• Maxing out limits on credit cards
• Numerous credit applications in a short time period
A credit score is a measure of risk based on the information provided by your credit report. The most common scoring system is called the FICO score, where the credit scores range from 300 - 850, with 850 being the best (lowest risk). Over a lifetime, a consumer will pay more for credit (in higher interest rates and fees) if they have a lower FICO score.
Source: Fair Isaac Corporation.