What is a Credit Score – and what does it mean?
What is a Credit Score? It is the current summary of your entire credit report information, but it is expressed as a single number. Of course, your credit score is a very important single number, so it is calculated using an equation that evaluates many data points -- these are typically called score factors -- from the three credit-reporting agencies. When they create a credit score, they compare all this information to the patterns that are found in the many thousands of other past credit reports they have access to, and then they use this information to calculate the credit score and then to identify the specific level of what is usually called credit risk. This single score allows the lenders to make assumptions as to how likely it is for a person to repay a loan, or to make credit payments in a timely manner. The higher a score is, the more likely it will be that a person will get the credit for which they are applying.
How is a credit score determined?
Everyone agrees that credit scores are important. This is because our credit scores are the summary of our credit report information when it is represented as a single number. Every little score factor has negative and positive effects on the score. A few of the specific factors that are primarily used for this purpose are listed below in order of how much they may affect your score, which means that the factors that are on the list first lower your score most. Examples include:
- Your credit inquiries
- Your serious credit delinquencies
- If you have recently opened new lines of credit
- If the average balance of your revolving credit accounts is too high
- Not having enough mortgage accounts
How and why do companies use a credit score?
Credit scores are used by companies in a lot of ways. Remember, credit scores are often the most-used tools by creditors, employers, and finance and insurance companies. These kinds of companies will often rely on credit scores when they determine someone’s creditworthiness. The credit score is considered a credit snapshot these companies use if they are making quick credit decisions. Of course, creditors can also get your full and complete credit report so they can review and assess a more complete set of information that will help them determine your level of risk.
Each of the credit reporting agencies – Equifax, TransUnion, or Experian – can also offer industry-specific scores if they are checking a person’s credit. These sorts of industry-specific credit reports will let lenders in specific industries garner a better understanding of the specific factors that are often present in a person’s credit. As an example, lenders is working in the automotive industry might want a score model that will evaluate a person’s auto loan payment history. This specific score will be based on the all the data available with an agency, and could be different from one agency to the next. Remember that credit score ratings can also be different, depending on the kind of score model being requested, such as mortgage, auto, etc.
Can I get my own credit report?
Of course! A fast way to get your free credit report, which you’re entitled under federal law, is to visit www.annualcreditreport.com. At that web address you can view your credit report from all three of the credit reporting agencies. You can do this one time every twelve months. But if you would instead prefer daily monitoring of your credit report from all 3 of the credit reporting agencies, you can chose to use thecreditdream.com. thecreditdream.com will allow you to get your personal report online when you want it, 24 hours a day. And, if thecreditdream.com ever detects any suspicious or irregular account activity, we'll contact you right away.
How often will my credit report get updated?
he standard method for updating credit reports is for creditors to submit information to the credit reporting agencies each month. However, the day of the month that creditors submit the information varies. Because of this, the agencies may receive their updates from one creditor on the third of every month and from a different creditor on the thirteenth. That is why it is important to get and maintain access to your own credit report for everyday use.
What is credit monitoring?
Credit monitoring is a service that continuously monitors your credit report for changes. Changes could include missed payments, new inquiries or new accounts. thecreditdream.com offers credit alerts in our member portal should there be any new activity to your credit file. It is also an important tool for fighting identity theft as you will be updated immediately should someone try to open an account in your name. Without credit monitoring you are at risk of someone stealing your identity and racking up debt in your name.
So what exactly is credit monitoring?
Credit monitoring is pretty simple. Credit monitoring is defined as a service that continuously monitors your credit report for any new changes and updates. These changes and updates that are seen on your report might include new inquiries, missed payments, and even new accounts. But if you chose to become a thecreditdream.com member, we’ll contact you if any of these appear on your credit file. Credit monitoring can be a very effective tool when fighting and protecting from identity theft, since customers get updated as soon as someone tries to or succeeds opening an account in the customer’s name. If you don’t have credit monitoring you could be at risk that someone may steal your identity or even run up debt in your name -- something you could be financially responsible for or have to deal with fighting. But we’ve got your back!
And what’s a credit inquiry?
A credit inquiry is when a financial company requests information that will help them understand better your credit worthiness. These financial-type companies use the elements of your credit report in order to help them decide how much credit they should issue to you. Some of the most common types of inquiries are when a person applies for an auto loan or a home loan, or even when a person applies to rent an apartment. Don’t forget, these inquiries can be made only with your permission.
What sorts of benefits will I receive with a thecreditdream.com membership?
When you start a thecreditdream.com membership, you will receive unlimited access to your credit reports and scores. You’ll also get 24-hour credit monitoring, as well as credit alerts. Also, you get benefits that are exclusively available to members including full access to all three credit reports and scores.
But then how do I view my credit reports and scores?
The first thing you can do is complete your enrollment. Then you are automatically directed to our members-only dashboard. From the members-only dashboard, you can navigate easily between all the member benefits by using the tabs that are listed near the top of the page.
How do I view credit alerts?
When you log onto the members-only dashboard, just look at the top of the page. You will see a 3-credit alerts tab. Just click on that tab you will see that it displays the alert you have received, along with a notice informing you that you will probably want to take a moment to review the information.
I got a credit alert – what should I do?
The next recommended step really depends on the topic and specifics of the alert. As an example, if you get an alert stating that there is a new inquiry on your report, then you will need to review a few data facts before you take action. For example, if you have applied for credit recently, then the notice you received may be explained by this. But if the inquiry that you received was not due to any action you had taken, then you should call the company listed on the inquiry. These steps will be the same for any new accounts you notice that have been opened in your name.