Unit 3 Study Guide

How long payment information shows up on your credit report

Generally speaking, negative information such as late or missed payments, accounts that have been sent to collection agencies, accounts not being paid as agreed, or bankruptcies stays on credit reports for approximately seven years.

How to read a credit report

1. The date you opened any credit accounts or took out any loans. 2. The current balance on each account. 3. Your payment history. 4. The credit limits and total loan amounts. 5. Any bankruptcies or tax liens. 6. Your identifying information (name, address, Social Security number)

Who to turn to for help with your credit

Credit repair companies work with the credit bureaus and your creditors to challenge the negative report items that affect your credit score. They ensure your credit history is up-to-date, accurate and honestly reflects your finances.

How credit can impact your financial situation

Credit scores play a huge role in your financial life. They help lenders decide whether you're a good risk. Your score can mean approval or denial of a loan. It can also factor into how much you're charged in interest, which can make debt more or less expensive for you.

Most important factors in calculating credit score (positive and negative factors) Utilization rate →

Payment history is the most important ingredient in credit scoring, and even one missed payment can have a negative impact on your score. Lenders want to be sure that you will pay back your debt, and on time, when they are considering you for new credit.

What lenders look for on your credit score

The other factors that lenders look at make up your financial profile. These include your credit history, payment history, income and overall financial situation. While each lender assesses your credit history differently, they will all look at what is known as the "five Cs" of credit.

Debt Snowball vs. High Rate debt repayment methods

This is where the methods vary. In the debt avalanche method, you pay extra money toward the one debt with the highest interest rate. With the debt snowball method, you pay down the smallest debt first and work your way up, regardless of the interest rate.

How and where to check your credit report for free (don't ever pay for it!!)

To get your free reports, go to AnnualCreditReport.com. The credit reporting agencies are making these reports free for the next year. If you're one of the many Americans struggling to pay your bills right now because of the Coronavirus crisis, here's what you can do: Contact the companies you owe money to.

The relationship between credit scores and credit reports

A credit report is a statement that has information about your credit activity and current credit situation such as loan paying history and the status of your credit accounts. Your credit scores are calculated based on the information in your credit report.

Credit Reports and exactly what can be found on them

A credit report provides detailed information on how you have used credit in the past, including how much debt you have and whether or not you've paid your bills on time. You can view your credit report for free at any time, without impacting your credit report or credit score.

Which types of loans or credit cards will check your credit

Hard Inquiries If you apply for credit, such as mortgage, auto loan or credit card, the lender (with your permission)will check your credit report and credit score from one or more of the major credit bureaus.

How to start building credit

How Can I Establish First-Time Credit? 1.Apply for a credit card. Lack of credit history could make it difficult to get a traditional credit card. 2. Become an authorized user. 3. Set up a joint account or get a loan with a co-signer. 4. Take out a credit-builder loan.

How to dispute errors on your credit report and when to dispute them with the lender/bank or the credit bureau

How to Dispute a Credit Report Error in 5 Easy Steps Step 1 - Identify any credit report errors. Review your credit reports periodically for inaccurate or incomplete information. Step 2 — Contact the furnisher. Step 3 - Dispute Your Credit Report's Errors. Step 4 - Allow time for the investigation. Step 5 - Follow up after the investigation.

Consequences of not paying your debts

If you default on a credit card, loan or even your monthly internet or utility payments, your account could be sent to a debt collection agency. Unpaid debts sent to collections hurt your credit score and may lead to lawsuits, wage garnishment, bank account levies and harassing calls from debt collectors.

Best ways to improve your credit score

Steps to Improve Your Credit Scores 1. Pay Your Bills on Time. 2. Get Credit for Making Utility and Cell Phone Payments on Time. 3. Pay off Debt and Keep Balances Low on Credit Cards and Other Revolving Credit. 4. Apply for and Open New Credit Accounts Only as Needed. 5. Don't Close Unused Credit Cards.

The names of all three credit bureaus:

TransUnion, Equifax, and Experian