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Understanding your Credit

Your credit report can impact everything from whether you’re approved for a loan or credit card to your interest rates and credit limits. It’s important you understand what’s in it, so here’s what you need to know.

The difference between a credit report and credit score

Your credit report is a history of your current and past borrowing and payment activities. Lenders refer to it to see how you handle credit—for example, to check whether you’ve paid your bills on time and in full in the past.

Your credit score is a number—kind of like a grade—of your “creditworthiness” based on your credit report. Lenders use it to gauge your risk as a borrower. The higher your score, the better your chances of being approved for credit and getting a better interest rate and terms.

How to access your credit report
Legally, you’re allowed one free copy of your credit report every year from each of the three major credit bureaus: Equifax, Experian, and TransUnion. Even better: With CBNA Credit Companion℠ service, you can access your Experian credit report as often as you want for free anytime you log into your account.

What to look for on your credit report
Review all the information, and if anything is wrong, report it to the credit bureau right away.

  • Personal info: Is everything, including your social security number, correct and current? Have you lived in all the places listed? Mistakes happen, so double-check the details.
  • Credit history: This is the meat of your report. It covers open and closed credit accounts, shared accounts, total loan amounts, remaining balances, and late payments. Follow up with the credit bureau immediately if you spot an error.
  • Inquiries: “Soft” and “hard” inquiries are requests from lenders to review your report. Soft inquiries don’t affect your score. Lenders make them before offering you a new credit card or increased credit limit, for example. They make hard inquiries when you apply for a credit card, loan, line of credit, or mortgage. Hard inquiries do impact your score and too many can bring it down.
  • Public records: This publicly available information includes bankruptcy and foreclosure.

How credit scores are calculated
There are several ways to calculate credit scores, so scores can vary. Our CBNA Credit Companion℠ service gives you free access to your Experian credit score, which is based on these key factors in order of importance.

  • Payment history: Whether you pay your bills on time or have missed payments.
  • Depth of credit: The age and types of your credit accounts.
  • Credit utilization: The amount of credit you’re using compared to your total credit limit.
  • Balances: The total balances remaining on all your credit accounts.
  • Recent credit: The number of new credit accounts and hard inquiries.
  • Available credit: How much credit is available on your revolving accounts.

Optimal credit scores
With a super-prime score of 781-850 or a prime score of 661-780, you’ll most likely be approved for a loan or line of credit. If your score is below that, it could be more difficult and you may want to work with a financial professional to help you take steps to improve it.

Check your credit report often
Keep an eye on your credit report even if you’re not planning to apply for a loan, mortgage, line of credit, or credit card. It’s the only way to catch a mistake and could alert you to fraud or identify theft. In addition, consider using a tool like CBNA Credit Companion℠ that notifies you whenever your credit report or score changes.

Stay on top of your credit! There’s no cost to use CBNA Credit Companion℠ and it doesn’t impact your credit score when you do. Simply log in to get started.


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