Top 10 Credit Questions and Answers To Build Your Credit
Learning about credit can feel overwhelming if you don’t know how credit bureaus monitor and adjust your scores. Most lenders will not issue personal loans or new credit cards if your credit score is low or you don’t have many lines of credit open. Below, we list 10 of the most common credit questions and answers to learn more about credit and boost your score.
What Is a Credit Score?
A credit score is an algorithmic estimate of how likely you are to repay debt based on the information in your credit report. Your credit score can range from 300 to 850, depending on how many credit accounts you have open and how long you’ve had each account.
Credit scores are not the same as credit reports. Your credit score only provides a basic summary of your creditworthiness. In contrast, a credit report offers a more in-depth look at your credit history, including:
- Credit balances
- Closed accounts
- Open accounts
- Payment history
- Outstanding debts
Why Do I Have Multiple Credit Scores?
Three bureaus issue credit reports in the United States: Experian, Equifax, and TransUnion. Lenders usually view credit scores from one or all three agencies when assessing your creditworthiness. Your credit score may vary depending on which model the credit bureau uses to score your financial history.
For example, some credit companies use models like FICO to issue scores based on how many open credit card accounts you have and how much you pay toward your mortgage. According to Experian, 90% of reputable lenders use at least one of 16 FICO credit scoring models. Other financial entities—like banks or private lenders—sometimes use their own models to determine your credit score.
Don’t worry if your credit scores differ by a few points. These minor inconsistencies rarely affect your ability to qualify for a loan. Instead, focus on making payments on time and opening new accounts to grow each of your scores over time.
What Is a Good Credit Score?
A good FICO consumer credit score typically ranges from 670 to 799.
The VantageScore model differs slightly, with good scores ranging from 661 to 850. A higher credit score is a better credit score.
How Often Will My Credit Score Change?
Some credit companies update your scores daily. However, you should expect your credit to change every week or at least once a month.
Don’t worry if your scores dip by a few points now and again. Even if you make regular payments toward your accounts, your credit can fluctuate between one and ten points.
What Affects My Credit Score?
The only factors that contribute to your credit score are:
- Your Payment History
- Your Existing Debt
- Your Credit History
- Hard Credit Inquiries
- The Types of Credit You Have Open
Your yearly income and occupation do not impact your credit score.
How Do I Get a Copy of My Credit Report?
Credit monitoring helps you keep track of your credit score and identify inaccuracies in your report. Federal law protects your right to view a copy of your report for free through AnnualCreditReport.com. Nevertheless, some credit companies will charge you a subscription or single-use fee to view your numerical scores online.
You may also request a credit report annually by mail with TransUnion, Experian, and Equifax. You can even view your Experian credit report online by creating an account with Experian.
Can I Remove Information from My Credit Report?
If you find discrepancies on your report that lower your credit score, you can send a formal request to the credit bureau to remove the following from your report:
- Unverifiable accounts
- Outdated addresses
- Unpaid balances
- Inaccurate medical expenses
- Inaccurate credit card debts
However, you can not remove new student loan accounts, court-issued childcare payments, or debts issued by a bankruptcy court.
The credit bureau may ask for documents that confirm your dispute by mail or online. After submitting your claim, they will conduct an investigation and adjust your credit score based on their findings.
Will Checking My Credit Score Lower It?
This is one of the most common credit questions, and answers depend on who checks your credit score and how they do it. Checking your own credit score will not lower your score. In fact, some people check their credit score every week to reduce their risk of identity theft.
A hard inquiry—typically conducted by a lender after you apply for a new line of credit—may reduce your credit score temporarily by fewer than five points. You can offset this dip by making regular payments toward your credit accounts.
Can I Get a Loan with a Low Credit Score?
Credit reviews and co-signers are unnecessary for some loans, such as a money advance or a payday loan. These solutions are usually accessible if you have a low credit score. However, taking out a loan with bad credit comes with several risks.
Some payday loans can have a yearly interest rate of 1,000% or more.
You may be able to take out a personal loan by having qualified individuals with good credit cosign for you.
What Are the Best Ways to Build Credit?
You can apply for a secured credit card to start growing your credit score. Just remember to keep an eye on interest rates when signing up.
For example, some banks offer credit cards with 10% interest or less, including other reasonable costs and annual fees. Other lenders may issue credit cards at 12% to 22% interest.
Paying your credit card bills, auto loans, and student loans on time once a month can also help you build credit.
Paying your rent won’t raise your credit score. However, you can report rent payments to a credit agency, which may help your credit score grow over time.
Learn More About How to Build Good Credit
Contact Boost Your Score for more credit questions and answers. Call 1-800-259-1270 to see how we can help.
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