WHAT’S ON YOUR CREDIT
REPORT?
Your credit report is an essential part of your day to day life, even if you may
not realize it at first. Your credit report is used by credit lenders, home
mortgage lenders, insurance companies and even employers when each of
them determine if they should, or should not, work with you. Do you know
what is on your credit report? If not, there has never been a better time than
right now to find out.
WHAT IS IT?
The first question that must be answered is the most important. What is your
credit report? A credit report is a collection of information about you. This
information is centered around your specific ability and experience with credit
use. Credit, a form of money that is given to individuals to spend and repay
over time, is given by lenders only if they believe you are a good risk to
them. Every lender must define what level of risk is acceptable to them, but
they base their decisions on the past usage of credit by you.
Let’s explain. Over time, creditors lend to hundreds and thousands of people.
They develop specific algorithms that help them define who is a credit risk by
looking at the patterns in the way that individuals spend using credit. They
determine how much risk they are willing to take to work with people.

Risk is a calculated tool for lenders. The more risk you are, the more they can
charge in the form of interest rates and fees. On the other hand, if there is
too much risk from an individual, that individual is unlikely to repay their
debts and the lender stands to lose money instead of making it.
What does this mean for you, though? As a borrower, you need creditors to
see you in the best light possible. The lenders to the credit reporting
agencies directly report the decisions you make regarding credit.
 You obtain a credit card. You use it to make a $100 purchase. The
credit card company reports this action to the credit bureaus, which
keep track of all of your activity.
 You make a payment on time to the lender. The lender lets the credit
bureaus know. This looks good to them. Over time, regular payments
increase your credit score.
 You make a late payment on the credit card. The lender reports this to
the credit bureaus. This looks bad. Just one late payment will remain
on your credit report for up to two years, and can drop your credit
score.
This record is kept ongoing from the time you first get some form of credit.
The more good notches you get from your creditors the better your credit
score is. You may be wondering what a credit score is, too.
A credit score is a numerological representation of the credit report. The
credit bureaus take all of the information on you and put it into that complex
algorithm to get a number that represents your credit usage. Credit scores
can be under 350 up to 800, depending on the credit bureau. The higher the
score is, the better. This shows the company that you are a good credit risk. 

High credit scores mean:
 More lenders willing to give you credit
 Lower interest rates on new lines of credit
 More ability to borrow at a higher credit limit
 Lower interest rates possible on credit you already have
The key here is taking your credit score, no matter where it is right now, and
improving it. You can do this by understanding your credit report thoroughly
and by making smart financial decisions going forward.
There is no instant credit eraser or improvement tool that works to move a
350 credit score up to 700. In fact, the credit bureaus will not tell you what
percentage of improvement you will have if you make specific credit
decisions. The fact is, the mathematical formula they use is highly guarded.
Instead, you will need several things to see improvement with your credit:
 Time
 Dedication to good credit usage
 Removal of any inaccurate information on your credit report
Also note that when creditors consider you for a credit card or loan, they
most often use just your credit score, with a brief look at your credit report.
Therefore, it is very important to do whatever it takes to get this number up.