Read more and learn how to keep your credit healthy.
Jeanne S. answered an ad that promised 0% financing for her new car. When she got to the dealership, the best she could get was 6%.
Marco N. and his wife found their dream house. But their loan officer told them that the interest rate they qualified for was so high that they couldn't afford the house anymore.
Karen W., after a long search, found an apartment to rent - but the landlord turned her down as a tenant, after he ran a credit check on her.
All of these peoples' lives were affected by information in their credit report. Sometimes our own credit history affects us-decisions that we make ourselves. Sometimes we are hurt by the things that other people do-through errors on our reports or, worse still, identity theft.
Credit Reports and Credit Scores
Q. What is a credit report?
A. It's a history of how you pay your bills. It also includes where you live, whether you've been sued, arrested, or filed for bankruptcy, and which companies have checked on your credit-worthiness. All of this information is collected by three nationwide consumer reporting companies. You should know that the information that they've collected may not always be the same, so it's impor¬tant to check out all three companies when you check your credit history.
Q. What is a credit score?
A. Information in your credit report is boiled down into a number that helps lenders and others decide whether to give you credit-and at what rate. It's supposed to represent how likely you are to repay your debts, because it's based on information in your credit report. Scores range from 300 to 850. Most people score in the 600 to 700 range.
Q. Why do they matter?
A. The better your credit history, the higher your credit score. The higher your credit score, the lower your interest rates will be. That's true if you're buying a home or car, or if you're simply using a credit card. To creditors, a higher score means you're a lower risk, so companies will charge you less to loan you money.
Even if you're not in the market for more credit, you should know that your credit history and score may both affect whether you can get auto or home insurance, and how much you'll pay for it. Since many landlords check credit histories, your credit may also affect whether or not you can rent an apartment. The same is true of employers. Many now check credit histories before offering you a job.
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