Understanding Your Credit Report and Score


If you have ever obtained a mortgage or vehicle loan, it’s likely your credit history and credit score has been checked in order to receive that loan.


Understanding your credit score and taking steps to improve it can help you maintain a healthy financial outlook. Lets start by understanding why it is important to have good credit.


The Importance of Credit


In simplest terms, credit is money you borrow and promise to pay back with interest. Types of credit include: revolving credit (such as credit cards), installment credit (such as automobile and personal loans), and real property credit (such as home purchase, refinance and equity loans). Having access to credit is important, as it can be useful in times of emergencies, can sometimes be more convenient than cash, and allows you to make large purchases. However, misusing credit can cause financial problems.


What is a Credit Report?


Your credit report is a summary of information on file with a credit bureau, a company that collects data about how people handle credit. The three major credit bureaus are Equifax, Experian, and TransUnion.


Information About Your Financial Background


  • The total number of credit accounts you have open, including mortgages, credit cards, automobile loans, and other accounts
  • The amount you owe on each account, and the monthly payments you must make on each
  • The accounts that are properly paid
  • “Delinquent” accounts (for which payments are past due and may negatively impact your credit score)
  • “Derogatory” accounts (those which negatively impact your credit score)
  • >The accounts that have been closed

What is a Credit Score?


A credit score is a numerical summary of the information contained in your report. Scores typically range from 300 to 850. The higher the better. Your score is calculated lower the more negative entries you have on your report. Worst entries include charge-offs, debt collections, bankruptcy, foreclosure, tax liens, and judgements. Many creditors, lenders and other businesses use your credit score to make decisions about approving applications or giving you a competitive interest rates.

Strengthen Your Score


  • Improve your payment history by paying all your bills consistently and on time. Carefully consider any offers from creditors to “reduce” or “skip” payments before accepting.
  • Get current on delinquent accounts to reduce your outstanding debt and to avoid having delinquencies reported. Keep balances low on credit cards.
  • Build on your credit history. The longer you have had credit, particularly if it’s with the same credit issuers, the better for your credit score.
  • Think twice before applying for new credit. Don’t open accounts you don’t need, as inquiries made on your credit report will lower your score.
  • Diversify your credit. A large number of revolving credit accounts with open balances, for example, can result in a lower score than a combination of mortgage, installment, and revolving credit balances.

American United strives to help you improve your credit rating. For loans booked with American United, we report credit information to all three major credit bureau agencies at the end of each month. Although we submit the information to the bureaus at the end of the month, the bureaus have 30 days from the receipt of our data to update a consumer’s credit report.


Reporting Your Credit Data


American United reports your credit data to the three major tax bureaus, Experian, Equifax, and TransUnion. The financial institution listed on your credit report is American United Federal Credit Union, your loan servicer.

Here is the contact information for each credit bureau:

Experian
475 Anton Blvd.
Costa Mesa, CA 92626
888.397.3742
www.experian.com

TransUnion
P.O. Box 2000
Chester, PA 19022
800.916.8800
www.transunion.com

Equifax
P.O. Box 740241
Atlanta, GA 30374
800.685.1111
www.equifax.com


Common Credit Score Myths


It seems many Americans share common misconceptions when it comes to understanding that three-digit number that reflects an individual’s credit score. Here are five common credit score myths explained to offer a better understanding:

  • Paying on time and carrying a balance will raise my credit score.
    False. Paying on time is important, but also paying as much of your balance as you can. If you can pay your balance in full, your credit score will improve, and you’ll save money on interest that you might be charged in the long run.
  • One late payment won’t damage my credit score.
    False. One late payment will cause your credit score to fluctuate. Your credit score is not a static number, but rather a picture of your credit rating that changes from day to day based on your activity.
  • My credit score is the only part of my credit history I need to worry about.
    False. Your credit report is actually just as important as your score, so be sure to watch it carefully and make sure that it reflects current and accurate information. From identity theft to clerical errors in reporting, mistakes on your report can cost you. Take steps to address any errors as soon as possible.
  • It is quick and painless to improve bad credit.
    False. Negative activity will remain on your report for seven years, but recent transactions are weighted more heavily in the formula that determines your score.
  • Joint credit accounts will not affect me after a divorce.
    False. Having a joint account means that all parties are equally responsible. So after a divorce, any mistakes made will affect both parties equally if the accounts are still held jointly.

Frequently Asked Questions About Credit

What should I do if my credit was pulled and I believe there are inaccuracies in the way my account is reported?

You must contact the credit reporting agencies (CRAs) directly and dispute the information. Once the CRAs receive the dispute, they will contact us and we will investigate the matter.

Can I speak to someone directly about inaccuracies in my credit report?

Due to the sensitivity involved in discussing a consumer’s credit reporting history, we will not verbally try to resolve alleged inaccuracies. However, after you have received the results of your initial investigation with the credit reporting agencies and you are not satisfied with the results, you may contact us directly. You can dispute the initial results and request that a reinvestigation be completed by us.

What do I do if I believe I am a victim of ID theft?

In order to comply with your request, you must file a report with the local police or the police in the community where the identity theft took place. You must also file a complaint with the FTC using one of the following methods:

  • Online: www.consumer.gov/idtheft
  • Call FTC’s Identity Theft Hotline: 1.877.IDTHEFT
  • Write: Identity Theft Clearinghouse, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580
  • Complete an ID Theft Affidavit provided by the FTC and include the Fraudulent Account Statement

What should I do if I cannot wait 30 days for my credit information to be updated? I am trying to obtain another loan and need my report corrected today.

You may contact your customer service representative to request a payment history, and we will mail or fax this information to your attention.

What should I do if you are not reporting my credit information, or my account has been removed from my credit report? How can I get this loan added back to my credit report?

The only way a customer’s account can be added to their credit report is through our monthly data tape transmission. If a customer has used a credit repair clinic to get items removed from their credit or has disputed an item and it was deleted, the credit reporting agencies cannot add this item back to the consumer’s credit report due to FTC regulations.

For more information on Credit Scores and Reporting, go to www.experian.com/credit-education/credit-information.html


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