Credit reporting agencies receive information about all of your credit accounts – credit cards, personal loans, auto loans or leases, mortgages, and so on -- from your lenders. This information is then compiled into a credit report that includes:
- Payment history -- on-time, late and delinquent payments, closed accounts and public records (like tax liens and bankruptcies)
- Amounts owed -- how much you owe on each account
- Length of credit history – how long you’ve held each account, and how often you use it
- New credit -- recently opened accounts and recent inquiries
- Types of credit – credit cards, loans, and mortgages
Your credit report includes both positive and negative information, which provides a detailed picture of your credit worthiness. The information is also used to generate your credit score – a three-digit number that acts as a snapshot of your credit.
There are three credit-reporting agencies in the United States (see the listing on the side of this page), all of which capture information and provide reports. While most of your information appears on all three reports, there may be some variations; one report may include information not available on the others. That is why it’s important that you keep track of all three credit reports.
Credit reports are based entirely on financial information provided by creditors. It is illegal for credit reporting agencies to consider any other factors in determining your credit status, including race, ethnicity, religion, national origin, gender, sexual preference, marital status, age, salary, occupation, employment history, where you live, interest rates on your accounts, child/family support obligations, information not on your credit report, or if you are in credit counseling.
Checking your credit report
It is important to make sure that all the information that appears on your credit reports is correct. Check all three of your credit reports once a year, especially before making large purchases. You’re entitled to one free credit report from each agency every year. You can request all three credit reports from The Fair Isaac Company at www.myFICO.com.
If you believe that your credit report contains incorrect information, notify the credit reporting agency in writing with copies of supporting documents. The agency must investigate and respond to your inquiry within 30 days. Please keep your Standard Pacific Loan Officer informed about any action you’re taking so we can order another credit report after changes have been made.
Tips for healthy credit
There are no quick-fixes for improving your credit, so it’s important to get and keep your scores and reports healthy. Here are some guidelines for managing your credit positively:
- Pay your bills on time. Delinquent payments have a major impact on your credit score.
- Contact your creditors if you are having trouble paying your bills. Communication is key, and lenders will often work with borrowers to create more manageable payments.
- Keep credit card balances low. High debt can negatively affect your score.
- Pay off debt instead of moving it around. Even zero-interest balance transfers often come with hefty transfer fees.
- Keep your accounts open. Closing unused credit cards doesn’t improve short-term credit scores.
- Don’t open new accounts. New credit card accounts you don’t need won’t increase your available credit.
- Don’t open too many new accounts all at once. Too many new accounts raise red flags.
- Shop for loans all at once. Multiple credit inquiries can bring your credit score down – but if you shop for certain types of loans within a set period of time, all the inquiries only count as one. For example, when you shop for a mortgage, all the credit inquiries made by lenders within 45 days only show up as a single inquiry.
- Gradually reestablish credit if you’ve had problems. Opening and paying new accounts responsibly will help improve your score over time.