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Understanding Credit Reports


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Positive and Negative Credit History  

Credit History

Lender Perspective:

Positive = Low-risk

•   Pay bills consistently and on time
•   Maintain reasonable amounts of unused credit
•   Apply for credit only when needed.
    This keeps inquiries to a minimum
•   Check credit reports annually and correct any errors that hurt the report 

Negative = High-risk

•   Routinely paying late on credit cards, utilities, and cell phone bills
•   Maxing out limits on credit cards
•   Numerous credit applications in a short time period

Credit Scores 

A credit score is a measure of risk based on the information provided by your credit report. The most common scoring system is called the FICO score, where the credit scores range from 300 - 850, with 850 being the best (lowest risk). Over a lifetime, a consumer will pay more for credit (in higher interest rates and fees) if they have a lower FICO score. The table below illustrates that if you have a lower FICO score you will have a higher interest rate which leads to a higher monthly payment.
Source: Fair Isaac Corporation.

This is the national average based up on a 36 month auto loan for $25,000


 FICO Score

Interest Rate

Monthly Payment

 Total Amount





















 Interest rates accurate as of December 24, 2012. Source: Informa Research Services


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