Important Update: Bureaus Offer Free Weekly Reports Through April 2022
In light of the unprecedented financial crisis caused by the COVID-19 pandemic, the credit bureaus have expanded free credit report access. You can now download your credit report from each bureau once per week through annualcreditreport.com.[1]
We recommend taking advantage of these free weekly reports to check your credit often during this crisis, so you can avoid mistakes.
Find answers to the web’s most burning credit questions here!
Good credit is essential for financial stability and success. But like so many topics in personal finance, it’s usually not something you learn about in school. With that in mind, Debt.com created this FAQ to answer all of the common – and less common – credit questions you have. These easy answers can help you understand your credit better so you can maximize your score and maintain a clean profile.
Having problems with your credit score? We can help you start to fix it today.
Q:Can I have a credit score without a credit card?
A: Of course. As long as you have some credit history, then you have a credit report. If you have a report, then you have something to calculate a score from. Some people stay away from credit cards all their lives and they still achieve a good score. It just involves using loans and repaying them responsibly.
It is worth noting that credit is usually easier to build with responsible credit card use. Credit cards diversify your debt and show that you can manage revolving debt. That makes you more experienced with credit and thus makes you more creditworthy.
Q:Do tax liens affect my credit score?
A: Recent changes to how credit scores are calculated affect how tax liens show up on your credit report. In April 2018, tax liens were removed from credit reports altogether. This means that the liens won’t change your credit score. You will still need to pay off your tax debt, though, as mortgage lenders still look at tax liens.
Q:Do you need monitoring if you don’t have credit cards?
A: It’s important to recognize that any type of credit can be included in your profile. This includes credit cards, as well as loans, in-store credit accounts and even public debts, such as back child support or alimony. If you opened any of these types of credit, even if the account is closed, you should have a report. Therefore, you have reason to check and monitor your credit. The type of ongoing monitoring you need depends on your goals.
Q:Does an authorized user build credit history?
A: The short answer is yes. A friend or family member can add you as an authorized user on their credit card account and you will receive a card of your own connected to theirs. This is a great option if you don’t have much of a credit history because you can start using credit without having to go through an approval process. Remember, an authorized user is not the same thing as a cosigner or a joint account holder.
Q:Does checking your credit score lower it?
A: No. Checking your credit score will never lower your credit. Only inquiries known as “hard pulls” can affect your credit score. A hard pull happens when you authorize a check related to a credit application. In other words, when you apply for a new loan or credit card. If you have too many new credit applications within a 6-month period, it can decrease your score.
All other inquiries are considered “soft pulls” and don’t negatively affect your credit score. This includes not only you checking your credit yourself, but also things like employment credit checks.
You can check your credit score daily and even check your credit reports daily through a monitoring service and it will never negatively affect your score.
Q:How does leasing a car affect your credit score?
A: Leasing a car can help you raise your credit score, but only if you are on time with your payments. When you first start the lease, you may actually see a slight drop in your score. This is because starting a lease opens a new account on your report. After about a month, this slight drop should bounce back up. If you pay your lease off early, this could also hurt your credit score. Stick to the terms of the lease and make your payments on time to really improve your credit.
Learn more about how leasing a car changes your credit score »
Q:How is my score calculated?
A: Most credit scoring models use five basic factors to calculate consumer credit scores. Each factor carries a different “weight” for how much it impacts your score.
- Credit history 35%
- Utilization 30%
- Length of use 15%
- New applications 15%
- Types of credit in use 10%
Q:How long does credit repair take?
A: The timeline for correction depends on the number of mistakes you need to dispute. Credit bureaus have 30 days from the date they received your dispute to verify the information. In some cases, they may request follow up information which means the process may take longer, depending on how quickly you respond.
Q:How much does credit repair cost?
A: There are different levels of credit repair services. You can actually complete the process yourself at minimal cost. There is software available for purchase that can assist you. Finally, you can hire a third party licensed attorney in your state to make disputes on your behalf.
Q:Is credit repair legal in all 50 states?
A: Federal law requires that any consumer has the right to dispute mistakes that may appear in their credit report. That means credit repair, itself, is 100% legal no matter where you live. You are also allowed to retain a third party to represent you and make disputes on your behalf. That party must be an attorney licensed in your state. Credit repair is illegal if the company you hire to correct your credit does not have a linseed attorney. They would not have the authority to make disputes for you.
States also have laws that build on the federal protections granted to you.
Q:Is there any way to raise your credit score in a month?
A: There are a couple of different methods you can use to raise your credit score quickly. The two actions that have the most impact are paying off a large credit card balance and getting current on a balance that’s past due. It’ unlikely that you will be able to raise your score by 50-100 points in one month, but you could boost your score enough to make a difference to creditors.
Q:Is there such a thing as free credit repair?
A: If you chose to go through the credit repair process yourself, it’s relatively free. You may incur small charges if you use registered mail, return receipt to send your disputes to the bureaus. However, you can obtain and review your reports entirely for free through annualcreditreport.com. In most cases though, if someone or some piece of software assists you with the process, there will be a cost.
Q:Should I monitor with one bureau or all three?
A: Although your credit reports should contain the same information, they may have discrepancies. These may be caused by differences in reporting or mistakes that should be removed. That gives you a reason to monitor the reports from all three credit bureaus. However, recognize that 3-report monitoring is usually more expensive.
Q:What happens to your credit score if you land in prison?
A: Even though your prison sentence won’t show up on your credit report, missed payments definitely will. There are ways to check your credit score from jail and prevent identity theft. To avoid credit score damage, talk to your creditors about allowing a friend or family member to take charge of your accounts. Don’t close any accounts, as this can actually hurt your credit score, but be mindful that some companies will cancel cards without warning after a period of inactivity.
Find out how your credit score is affected by incarceration »
Q:What has the biggest impact on your credit score?
A: Many factors go into calculating your credit score. Your payment history has the most impact, so make sure you are paying your bills on time if you want a high score. Other factors, like the length of your credit history and your account utilization, also cause credit score fluctuations. To see why your credit score may be changing, it’s important to check your credit report. Luckily, any negative impacts will lessen over time as the derogatory item ages.
Learn more about the most important factors for your credit »
Q:What is a credit report?
A: A credit report is a profile of your life as a credit user. It captures the loans and credit lines you’ve maintained throughout your life. By law, positive and neutral information can remain indefinitely, while negative information is removed after set periods of time.
The information contained in your report is what the credit bureaus and creditors use to calculate your credit score. Anytime you apply for a new loan or credit card, you authorize the company to run a credit check. This means they review your credit report to determine your risk as a borrower.
Q:What is a credit score?
A: A credit score is a 3-digit number that lenders use to evaluate your creditworthiness. It helps lenders and creditors assess your risk as a borrower. The FICO credit score is the most widely used. FICO scores range from 300 to 850. The higher your score, the easier it is to get approved for financing.
Q:What is credit monitoring?
A: Credit monitoring is a financial service that tracks changes in your credit. It allows you to build credit effectively and maintain a high score. The service also alerts you to changes in your credit report that may impact your score, either positively or negatively. Monitoring allows you to proactively build credit while avoiding actions that lead to a bad score.
Q:What is credit repair?
A: Credit repair (also called credit restoration or credit correction) is the process of disputing mistakes in your report. Between your creditors and the credit bureaus, errors can occur in reporting. This is the financial process of disputing those mistakes. If the information cannot be verified it must be removed.
Q:What will help my credit score the most?
A: If you’re new to credit or you need to rebuild your score, you are probably wondering what you can do that will help it the most. Late payments have the biggest impact on your score, so catching up on past payments will really help. In addition, paying off credit card debt will improve your credit score. To keep up with what’s going on with your finances make sure to check your credit report.
Q:Why do I have more than one credit report?
A: Each credit bureau (Experian, Equifax, and TransUnion) maintains its own proprietary version of your credit report. This means you actually have three reports instead of just one. Your reports generally contain the same information, although the way it’s reported in each version is unique.
Article last modified on September 13, 2022. Published by Debt.com, LLC
