What Is Reported On My Credit Report (and What Isn’t)
I was fishing with a friend of mine a few weeks ago and we were talking about credit. He mentioned that he had a good score and that he had “11 credit accounts”. Questioning him some more I came to find out that he had only a credit card and a student loan that he was making payments on. He thought his checking and savings accounts as well as other non-credit accounts were affecting his credit score. For this reason today’s topic is what accounts ARE reported to credit reporting agencies and which accounts are NOT!
Before we began, it’s important to know that creditors (like credit cards) report your payment information to the three credit agencies Transunion, Experian, and Equifax. The information is then fed to the Fair Isaac Corporation (FICO) where they use an algorithm to determine your credit score. Let’s take a closer look at which credit accounts affect credit score and which one’s don’t!
Accounts that ARE reported to Credit Reporting Agencies (CRA’s):
Credit Cards– Yup! Credit cards are one of the most common types of credit reported to the credit agencies. With credit cards, not only is payment history reported but also the amount of your balance to your limit. It’s important to keep low balances on our credit cards because it shows conservative use of credit which creditors like to see.
Mortgages– Purchasing a home is one of the biggest investments we will make in our lifetime. Your mortgage payment history is absolutely reported on your credit report.
Car Loans– Car Loans are reported by the company that financed your car.
Secured and Unsecured Loans– if you get an installment loan from a local bank they will report the payments.
Student Loans– Your student loan payments as well as the starting balance and the amount you owe are reported on credit reports.
Collections– Once a collection is placed by a creditor it has huge negative affect on your credit score. Collections can range from medical debts to cell phone bills, and unpaid utilities.
Public Records– Bankruptcies, foreclosures, liens, and unpaid state and federal tax payments are all reported and have a detrimental outcome on your credit score
Accounts NOT reported to Credit Reporting Agencies
Checking and Savings Accounts– Are not reported. The amount of money you have in the account does not play a part in your credit score.
Rent– rent is typically not reported on your credit report unless your landlord sends your payment history to the CRA’s.
Utilities– Your monthly utilities are not reported on your credit report but can be a source for nontraditional lines of credit which is a topic for another day! While they are not reported on the credit report for good payments, if you don’t pay your utilities they will place a collection against you!
Old Credit Information– Negative information such as late payments, bankruptcies and collections typically are erased after 7 years.
Debit Cards– Because the funds are drawn directly from your checking account and are not a form of credit debit cards are not reported to the CRA’s
Income– The amount of money you make plays no part in your credit score and is not reported.
Importance of Credit Scores
So to my friend AH (his initials) I hope this clears up your confusion on what is and what isn’t reported on credit reports. Your credit score is one of the most important qualifying factors when applying for a mortgage. A small 10-15 point increase can save you thousands over the life of a loan. If you’d like some help on how to build your credit or how to improve it please get in contact with me. If you are interested in purchasing a home, pre-qualify here!
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