Clearview Federal Credit Union - Understanding Your Credit Profile

Your credit profile or credit report is an electronic record of your credit activities. Every time you apply for credit, whether it is approved or denied, it registers on your credit report. Your credit report is a record of how you use credit and how much is available. There are 4 major areas of content in a credit report.

<ul><li> Identifying information. This includes your name, phone number, address, Social Security number and date of birth. It may also include a list of your current and previous employers and previous addresses.</li>

<li> Credit history. Your credit history is a summary of your credit transactions. This is the core of a credit report. It includes payment history, including any late payments, to banks, credit card companies, retailers and other lenders. Other lenders include mortgage and auto-finance companies. Any negative activity remains on a credit report for seven years.</li>

</li>Public records. This area includes any filings of personal bankruptcy , court judgments or tax liens against you. These items remain on your credit report for seven years, except for bankruptcy, which will remain for 10 years.</li>
<li> Inquiries. There are two types of inquiries: hard and soft. A hard inquiry is one where you are actually applying for credit and it will remain on your report for 2 years. A soft inquiry does not; these are entries when a lender pulls information on you to pre-qualify you for their latest and greatest offer.</li></ul>Your report shows the current credit that you have, including amounts owed, amounts available and payment amounts. If you are denied credit based on information in your credit report (the creditor must provide a reason for denial), you have 60 days from the day you receive a denial notice to receive a free copy of that report. The law also entitles you to receive a free credit report every 12 months if you are unemployed and seeking work within the next 60 days, are on welfare or your report is inaccurate as a result of credit fraud.

You can pay to obtain a credit report anytime. The three major credit reporting agencies, are Equifax, Experian and Trans Union. See related article titled <a href="CreditReport.aspx">“Request Your Credit Profile”</a>.

There is a lot of talk about Credit Scores these days. A credit score, or FICO Score, is a 3 digit number created to objectively measure one’s creditworthiness. It is a snapshot of a person's credit habits. There are five basic categories used to calculate and determine these scores.

<ul><li> PAYMENT HISTORY - 35 %. This carries the most weight. Credit cards, retail store accounts, installment loans and mortgages are taken into account when your score is calculated. Some points considered are: Do you have accounts in collection? Do you have any delinquencies and, if you do, how recent and how frequent are they? Do you make your payments on time? How much impact each item has on your score depends on the other information in the report. One 30-day late may not affect your score significantly if the rest of your report is good, however if that late payment was just last month, it will make more of a difference than if it was a 90-day late 4 years ago. The model looks at credit patterns, not isolated credit mistakes.</li>

<li> AMOUNTS OWED - 30%. The number of balances recently reported, the average balance across all trade lines and the relationship between the total balance owed and the total credit limit of each account is calculated. Your current level of borrowing and whether you are at or close to your limit factors in, as well as carrying too much in open credit lines, even if you do not have balances on those cards.</li>

<li> LENGTH OF HISTORY - 15%. The model looks at how long you have had an account, meaning when did you first start obtaining credit. It considers the total number of inquiries and new accounts opened, as well as the number of inquires and newly opened accounts in the past year and how long it has been since your last inquiry. Inquiries are considered because statistics show that those anticipating or starting to have financial difficulty will try to increase their available credit lines. It used to be that each inquiry would negatively impact your score, but in 1998, FICO updated its models to count any and all inquires made within a 14 day period as one inquiry, due to the fact that consumers now shop around for the best rate. When you request your report for your own purposes, this does not impact your score in any way, good or bad.</li>

<li> NEW CREDIT - 10%. The FICO model looks at how many new accounts you’ve opened, how long it’s been since you last opened an account and how many recent inquiries you have. Applying for too much credit is one of the easiest ways for someone to harm their score.</li>

<li> TYPES OF CREDIT - 10% This factor looks at the diversity of your credit accounts. A “mix” is the best kind of credit to have. That mix might include bankcards, retail cards, travel & entertainment cards, installment loans and mortgages.</li></ul> Any negative information could impact your score also, such as collection accounts, bankruptcies, liens, judgments, wage attachments, late payments, too little credit history, too many credit lines that are maxed out or too many inquiries. They also may consider your job stability and how long you’ve lived at your address. Things never considered are race, color, religion, national origin, sex, marital status or age.

Identifying information. This includes your name, phone number, address, Social Security number and date of birth. It may also include a list of your current and previous employers and previous addresses.

Credit history. Your credit history is a summary of your credit transactions. This is the core of a credit report. It includes payment history, including any late payments, to banks, credit card companies, retailers and other lenders. Other lenders include mortgage and auto-finance companies. Any negative activity remains on a credit report for seven years.

Public records.

Inquiries. There are two types of inquiries: hard and soft. A hard inquiry is one where you are actually applying for credit and it will remain on your report for 2 years. A soft inquiry does not; these are entries when a lender pulls information on you to pre-qualify you for their latest and greatest offer.

Your report shows the current credit that you have, including amounts owed, amounts available and payment amounts. If you are denied credit based on information in your credit report (the creditor must provide a reason for denial), you have 60 days from the day you receive a denial notice to receive a free copy of that report. The law also entitles you to receive a free credit report every 12 months if you are unemployed and seeking work within the next 60 days, are on welfare or your report is inaccurate as a result of credit fraud.

You can pay to obtain a credit report anytime. The three major credit reporting agencies, are Equifax, Experian and Trans Union. See related article titled “Request Your Credit Profile”.

There is a lot of talk about Credit Scores these days. A credit score, or FICO Score, is a 3 digit number created to objectively measure one’s creditworthiness. It is a snapshot of a person's credit habits. There are five basic categories used to calculate and determine these scores.

PAYMENT HISTORY - 35 %. This carries the most weight. Credit cards, retail store accounts, installment loans and mortgages are taken into account when your score is calculated. Some points considered are: Do you have accounts in collection? Do you have any delinquencies and, if you do, how recent and how frequent are they? Do you make your payments on time? How much impact each item has on your score depends on the other information in the report. One 30-day late may not affect your score significantly if the rest of your report is good, however if that late payment was just last month, it will make more of a difference than if it was a 90-day late 4 years ago. The model looks at credit patterns, not isolated credit mistakes.

AMOUNTS OWED - 30%. The number of balances recently reported, the average balance across all trade lines and the relationship between the total balance owed and the total credit limit of each account is calculated. Your current level of borrowing and whether you are at or close to your limit factors in, as well as carrying too much in open credit lines, even if you do not have balances on those cards.

LENGTH OF HISTORY - 15%. The model looks at how long you have had an account, meaning when did you first start obtaining credit. It considers the total number of inquiries and new accounts opened, as well as the number of inquires and newly opened accounts in the past year and how long it has been since your last inquiry. Inquiries are considered because statistics show that those anticipating or starting to have financial difficulty will try to increase their available credit lines. It used to be that each inquiry would negatively impact your score, but in 1998, FICO updated its models to count any and all inquires made within a 14 day period as one inquiry, due to the fact that consumers now shop around for the best rate. When you request your report for your own purposes, this does not impact your score in any way, good or bad.

NEW CREDIT - 10%. The FICO model looks at how many new accounts you’ve opened, how long it’s been since you last opened an account and how many recent inquiries you have. Applying for too much credit is one of the easiest ways for someone to harm their score.

TYPES OF CREDIT - 10% This factor looks at the diversity of your credit accounts. A “mix” is the best kind of credit to have. That mix might include bankcards, retail cards, travel & entertainment cards, installment loans and mortgages.

Any negative information could impact your score also, such as collection accounts, bankruptcies, liens, judgments, wage attachments, late payments, too little credit history, too many credit lines that are maxed out or too many inquiries. They also may consider your job stability and how long you’ve lived at your address. Things never considered are race, color, religion, national origin, sex, marital status or age.