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Understanding Your Credit Score

Once you get your credit report, you will want to review it carefully. Ordering it is not enough—you must read it. Credit reports may have mistakes. And if there are mistakes, you are the only one who is likely to find them. Your credit report contains a lot of personal and financial information. Be sure to keep any hard copies of your credit reports in a safe and secure place. If you do not want to hang on to your credit reports, be sure to shred them before getting rid of them.

Generally, there are five factors that make up your credit score; New Credit Inquiries, Types of Credit, Payment History, Length of Credit History, and Amounts Owed.

  1. New Credit Inquiries - 10% is established around your credit inquiries, meaning that every time you apply for credit, your score is impacted within certain FICO rules. Opening several credit accounts in a short amount of time represents greater risk—especially for people who do not have a long credit history.

  2. Types of Credit - 10% is established around the type of credit you have. Your FICO score considers your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. It is not necessary to have one of each, and it is not a good idea to open a credit account you don’t intend to use.

  3. Payment History - 35% is established from your payment history, collections, and public records. This is the one area where you can make the biggest impact on your FICO score, by paying your bills on time.

  4. Length of Credit History - 15% is based on your length of credit history. It is better to have credit for longer time frames so that a history is built up on your record.

  5. Amounts Owed - 30% is established from your credit utilization. This considers the amount that you owe compared to how much credit you have available. Many people think transferring balances from one credit card to another will improve their score, but eventually transferring balances comes with additional fees that increase the balance. This is the second biggest impact on your credit score. Keeping balances low and paying on time will generate the highest scores.

If you find something wrong with your credit report, you should dispute it. You may contact both the credit reporting company and the creditor or institution that provided the information. Explain what you think is wrong and why.

To correct mistakes, it can help to contact both the credit reporting company and the source of the mistake. You may file a dispute not only with the credit reporting company, but also directly with the source of the information, and include the same supporting documentation.

However, there are certain circumstances where creditors and furnishing institutions are not required to investigate.

You may file your dispute online at each credit reporting agency’s website.

If you file a dispute by mail, your dispute letter should include: Your complete name, address, and telephone number; your report confirmation number (if you have one); and the account number for any account you may be disputing.

In your letter, clearly identify each mistake, state the facts, explain why you are disputing the information, and request that it be removed or corrected. You may want to enclose a copy of the portion of your report that contains the disputed items and circle or highlight the disputed items. Include copies (not originals) of documents that support your position.

Send your letter of dispute to credit reporting companies by certified mail, return receipt requested, so that you will have a record that your letter was received. You can contact the nationwide credit reporting companies online, by mail, or by phone:



By mail

Download and complete the dispute form: Mail the dispute form with your letter to:

Equifax Information Services LLC

P.O. Box 740256

Atlanta, GA 30374

By phone

Phone number provided on credit report or

(800) 864-2978



By mail

Use the address provided on your credit report or mail your letter to:


P.O. Box 4000

Allen, TX 75013

By phone

Phone number provided on credit report or

(888) 397-3742



By mail

Download and complete the dispute form: Mail the dispute form with your letter to:

TransUnion Consumer Solutions

P.O. Box 2000,

Chester, PA 19022-2000

By phone

(800) 916-8800

If you suspect that the error on your report is a result of identity theft, visit the Federal Trade Commission’s website for information about identity theft and steps to take if you have been victimized. This will include filing a fraud alert and possibly filing a security freeze.

Read more about protecting your credit information by visiting the Consumer Financial Protection Bureau.

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