Credit

What Is a Credit Report?

A credit report is a record of how you've handled borrowed money. It's put together by the three major credit bureaus: Equifax, Experian and TransUnion. Lenders use it to see whether you pay your bills on time and how much debt you carry.

Each bureau keeps its own file, so your three reports may not be identical. Mortgage lenders usually review all three.

Your Right to See Your Report

You have the right to check your credit reports for free. The official site is AnnualCreditReport.com, where you can get free reports from all three bureaus (weekly free reports are available as of 2026, subject to change). Checking your own report never hurts your score.

Review your reports at least once a year and before applying for a mortgage. If you find an error, you can dispute it with the bureau, and it must investigate, usually within 30 days.

What Information Credit Bureaus Collect

• Personal details: name, current and past addresses, Social Security number, date of birth and employers
• Credit accounts: credit cards, auto loans, student loans and mortgages, with balances, limits and payment history
• Public records: such as bankruptcies
• Collections: debts sent to collection agencies
• Inquiries: a list of who has pulled your credit recently

Credit reports do not include your income, savings, race, religion, marital status or medical history details.

What Is Credit Scoring?

A credit score is a three-digit number, usually from 300 to 850, that sums up your credit report. The higher the score, the lower the risk you appear to a lender. The most widely used scores come from FICO, and VantageScore is another common model.

Lenders use your score to help decide whether to approve your loan and what pricing you'll get. A higher score can mean a lower rate and lower mortgage insurance costs.

Why Credit Scoring Is Used

Scoring gives lenders a fast, consistent and objective way to judge risk. Instead of relying on someone's personal opinion, every applicant is measured by the same rules. This helps make lending fairer and quicker. It also helps lenders set prices that match risk, which is why strong credit is rewarded with better terms.

How Scoring Models Are Built

Scoring companies study the credit histories of millions of people and look for patterns that predict whether someone will repay. For FICO scores, the general weights are:

• Payment history (about 35%): Do you pay on time?
• Amounts owed (about 30%): How much of your available credit are you using?
• Length of credit history (about 15%): How long have your accounts been open?
• New credit (about 10%): Have you opened many accounts recently?
• Credit mix (about 10%): Do you have a healthy mix of card and loan accounts?

How Reliable Is Credit Scoring?

Credit scores are good at predicting risk across large groups of people, but they aren't perfect for every individual. A score can't see why a late payment happened or know about your savings or income. That's why lenders consider the whole picture: income, assets and your full history. Errors on reports can also drag a score down, which is another reason to review your reports regularly.

How to Improve Your Score

• Pay every bill on time. Set up autopay or reminders. Even one late payment can hurt.
• Lower your card balances. Try to keep balances below 30% of each limit, and below 10% is even better.
• Don't close old cards. Older accounts help your history length and available credit.
• Limit new applications, especially in the months before you apply for a mortgage.
• Fix errors. Dispute anything inaccurate on your reports.
• Ask before you act. Before paying off collections or moving money around, talk with me. The timing and method matter.

If You're Denied Credit

If a lender turns you down because of information in your credit report, it must tell you so in writing, name the bureau that provided the report and let you know your right to a free copy within 60 days. You also have the right to dispute anything inaccurate.

A denial isn't the end of the road. Ask for the specific reasons, make a plan to address them and try again. I help clients build credit improvement plans all the time.

The Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is the federal law that protects the accuracy and privacy of your credit information. Among other things, it gives you the right to know what's in your file, to dispute errors, to limit who can see your report and to have most negative information removed after seven years (bankruptcies can stay up to ten). The Consumer Financial Protection Bureau enforces many of these rules.