What is a credit history?
Sometimes people talk about their credit. They refer to your credit history. Your credit history describes how you use your money:
- How many credit cards do you have?
- How many loans do you have?
- Do you pay your bills on time?
If you have a credit card or a loan from a bank, you have a credit history. Companies collect information about your loans and credit cards.
Companies also collect information about how you pay your bills. They put all this information in one place: your credit report.
What is a credit report?
Your credit report is a summary of your credit history. There they are listed:
- Your name, address, and Social Security number.
- Your credit cards.
- Your loans.
- How much money do you owe?
- If you pay your bills on time or if you pay them late.
Why do I have a credit report?
Before lending you money, businesses want to know a few things about you. Would you lend money to someone who pays the bills on time? And someone who always pays them late?
Businesses check your credit report to find out a few things about you. They decide if they want to loan you money or give you a credit card. Sometimes employers check your credit report when you apply for a job. Cell phone companies and insurance companies also check your credit report.
Who does my credit report?
A company called a credit reporting company collects your information. There are three big credit reporting companies:
- TransUnion
- Equifax
- Experian
These companies write and maintain your report.
Can I see my credit report?
You can get a free copy of your credit report every year. This means that you can receive a copy from each of the three companies that write your reports.
The law says you can get your credit reports for free:
- By calling Annual Credit Report at 1-877-322-8228. (they only attend in English)
- At AnnualCreditReport.com (only available in English)
Maybe someone will tell you that you can get a free report on another website. He is probably not telling you the truth.
What is a credit score?
A credit score is a number. That number is based on your credit history. But they won’t give it to you along with your free credit report unless you pay for it separately.
A high credit score means you have good credit. A low credit score means you have bad credit. Each company has different scores. Low scores are around 300. High scores are between 700 and 850.
Do I need to know my credit score?
You must know the information on your credit report. But a credit score is a number that corresponds to the information in your credit history. If you know you have a good track record, you will score well. You can get your credit report for free.
To know your credit score you have to pay. Sometimes a company may say that the score is free. But if you look closely, you might find that you were signed up for a credit check service for you. These services charge you every month.
What if I have no credit?
You may not have a credit history if:
- You have never had a credit card.
- You never got a loan from a bank or credit union.
Without a credit history, it can be more difficult to get a job, an apartment, or even a credit card. Sounds crazy: You need credit to get credit.
How do I establish credit?
Do you want to establish your credit history? You will need to pay the type of bills that are included in a credit report.
- Sometimes utility companies put information on a credit report. Do you have a utility bill in your name? This can help you build credit.
- Many credit cards put information on credit reports.
- Sometimes you can get a store credit card that can help you build credit.
- A secured credit card can also help you build credit.
