There are few things attached to your name that have a bigger effect than your credit report.  Whether you are applying for a home mortgage, a car loan, or a credit card, your lender will want to inquire into your credit history and credit grade.  It has even gotten to the point where people who are not lending you money want to see what your credit grade is to measure your level of personal risk, such as insurance companies or employers.  It is no question that it is important that your credit grade remains or becomes solid.

Modern credit grading usually uses the Fair Isaac Credit Score, otherwise known as the fico score.  This is a numeric score, traditionally assigning you a number between 350 (low credit score, high credit risk) to 850 (high credit score, low credit risk).  In order to calculate your score, the three major credit reporting agencies (Experian, Equifax and TransUnion) enter your recorded information into the fico model to produce a score.  Don't be surprised if your scores are slightly different for each agency, as they each have slightly different information.

There are a few things that present problems on your credit report.  Some of these are:

• * Inaccurate entries
• * Public records (judgments, collections, bankruptcies)
• * Credit repayment history (more than 30 days late)
• * Large number of creditors
• * Large number of revolving debts with high balances
• * Large number of recent credit inquiries

The world of credit scoring is confusing, and it is increasingly important for you to understand what your lenders are seeing.  If your credit score is low due to reporting errors, there are companies that specialize in credit repair.  However, be aware that these companies cannot deliver long-term solutions in most cases where a true error hasn't occurred.  If your credit is challenged due to legitimate factors, Debt Free Living can help you know the strategies that will help you avoid those pitfalls in the future.  With time, improved credit practices will be reflected positively in your fico score.  If you would like to have a conversation with  Debt Free Living regarding your credit situation, please send an e-mail to info@debtfreeliving.com.  Be sure to include your telephone number and the best time to reach you.