Credit History, Credit Score, and Credit Monitoring

What are credit history?

Your credit history contains all the facts about you that pertain to your credit "worthiness" and is often synonymous with the terms credit file, credit history file, and credit history history. Credit history about your credit history are maintained in the United States by three major credit history agencies - TransUnion, Equifax, and Experian. Your credit file is how a potential creditor, lender, and employer will get information about your sense of financial reponsibility and how you handle your finances. Since these people make decisions that greatly impact your financial future such as granting you a loan, credit line, or a job, you should make sure that items in your credit history correctly reflect your finances and credit history.

Credit history contain personal information such as legal names, aliases, current address, previous addresses, current and previous employers and companies, social security number, birthday, and information on your spouse. It also has information about credit accounts including credit cards, deparment store charge cards, and previous and outstanding loans. Credit history also contain matters of public record pertaining to finances such as bankuptcy filings, court money judgments, and tax liens. Credit history also contain information about the number of hard inquiries, which refer to each time you have applied for a loan or for credit and the lending agency did a credit check on you. You will want to check for new items and errors frequently in your credit file. An easy way to do this is to get immediate updates of changes in your credit history through credit monitoring services.

Often a credit agency or lender will calculate your credit score using the items of note found in your credit history history. Although there are many credit score systems in use, they are all similar in that they allow lenders, creditors, and potential employers to have a quick way to estimate your credit standing. Credit scores also give them a good way to compare and judge different applicants. People with good credit history history and correspondingly higher credit scores will have an easier time getting loans and securing jobs dealing with finances. People with higher credit scores also get more loans at better rates and terms.

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Each credit bureau will present a credit history in a different format, but all credit history will contain basically the same information. They fall into some general categories:

What is not included in credit history? As mentioned before, soft credit inquiries are not included in the credit history. They also do not have any information on your bank savings, checking, or brokerage accounts. Also, since public records are maintained for 7 years, items of record past 7 years also are not included in credit history. Credit history do not have information about criminal records, race, creed, or lifestyle.

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Access to credit history is determined by the term "legitimate business need." This will include a variety of companies such as credit card companies, creditors, loan lenders, insurance companies, landlords, child support agencies, utility companies, and phone companies. These people may request your credit history without your permission in most cases as long as they have your personal identifying information. Your current and potential employers may also access your credit history, but only with your permission. If you wish to block access to your credit history, you may opt to use a credit freeze.

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There are many different systems for calculating a credit score, but their purposes are the same -- to provide a numerical representation of your credit worthiness. The most commonly used system if the Fair Isaac company's FICO score. Credit scores are used as a quick glimpse into one's sense of financial responsibility and can also be used as an easy measure to compare and differentiate among different applicants.

Credit scores take into account such things as payment histories, credit and loan amounts owed, length of credit history, types of credit used, and recent and new credit. It assigns a numerical value to each positive and negative item in your credit history which adds up to a total score. Credit granters and loan lenders will use your credit score to evaluate how likely you are to pay back a loan on time and thus whether to grant you a loan or credit card. People with higher credit scores are more likely to be given loans and also receive better terms and rates on those loans.

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Credit monitoring services will watch over your credit file with continuous around the clock tracking and notify you whenever there is a change to the credit file. These services will alert you within 24 hours of a change, usually through email, phone, or text message as you see fit. Seeing changes as they happen so that you can correct inaccuracies and mistakes right away is important so that inaccurate negative items that are new do that impact your financial applications or employment opportunities. Fixing this mistakes as early as possible also helps avoid negative impacts to your credit score.

Perhaps the most important reason to get credit monitoring is in combating identity theft. Fraudulent activity in your credit history in the form of information changes or hard credit inquiries is usually the first sign of identity theft. Since you get notifications of changes to your credit file within 24 hours with credit monitoring, you can spot any activity that you did not initiate yourself. You can then follow up with the credit lenders or companies to stop the identity theft in action. The threat of identity theft is quite real, and the costs in money, finances, and time to restore your identity will be substantial. Credit monitoring helps you prevent the damage effected by identity theft to prevent it as it is happening.

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Any company, organization, or individual with a "legitimate business need" can request to see your credit history, and these requests are known as credit inquiries. They are divided into two categories called hard and soft; hard inquiries will affect your credit history and credit score while soft inquiries will not.

A hard credit inquiry occurs when you apply for a home loan, auto loan, credit card, or charge account and you give the credit lender permission to access your credit history. These hard credit inquiries appear on your credit history and affect your credit score.

A soft credit inquiry occurs when you request your own credit file, business request your credit file for the purpose of making credit offer or loan mailings, or businesses with whom you currently have a credit account request to see your credit history. Credit checks conducted by current and potential employers (with your permission) also do not count against your credit score. These types of credit inquiries do appear on your credit history, but they will not count for or against your credit score.

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You can request one free credit history from each of the three credit history agencies at www.annualcreditreport.com. We, however, believe that simply receiving your credit history once a year is not enough to track changes, mistakes, or fraudulent activity. If a new change, mistake, or identity theft actions occur, you need to be notified and respond as soon as possible. This will help prevent real damage from being done to your credit score and finances. Signing up for a credit monitoring service will often give you free credit history and scores as well as give you around the clock monitoring and notifications within 24 hours of any changes or fraudulent activity on your credit file.

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If you find errors or inaccuracies in your credit history, you'll have to submit a dispute letter or request to each of the credit bureaus on which the mistake appears. In some cases you may be able to dispute the error with online forms, but in some cases you'll have to submit a letter with your corroborating documents. For more information from each of the credit history bureaus, go to the dispute section on each of their websites:

When sending in a letter to dispute an error item in your credit history, be sure to enclose copies of supporting documents as well as a copy of your history with the item in question highlighted. The credit history agency is then required to investigate the item in question and reach a conclusion on the matter. If it finds that the item is indeed a mistake or error, they are required to notify all three credit history bureaus. Once the investigative process is finished, you will be given notice and a new copy of your history if changes were made as a result. Even if the dispute results in no change to your credit history, you can request that a statement of dispute initiation proof be included with your credit history in the future. Although this costs a fee, credit companies and lenders who request your credit file will see that you were proactive in contesting what you saw as a mistake in your credit history.

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A credit freeze occurs when you notify a credit history bureau not to release your credit history without your consent. This is an effective way to combat identity theft since a potential identity thief will not be able to see your credit history even if he has your personal identifying information. Each of the three credit history agencies has their own procedures for doing a credit freeze, but they usually involve identifying yourself and selecting a password to control the credit freeze. You then use that password if you want to unfreeze your credit file or release it to a certain company or individual.

The downside of using a credit freeze is that it takes time and effort to unfreeze or release your credit file, so it may hinder or delay timely application processes for credit cards, loans, mortgages, employment, housing, or insurance. Credit freezes are very effective in helping to protect your identity and credit history file. If you are using a credit freeze and anticipate making an application soon that will require a release of your credit history, you will want to initiate the process of unfreezing your credit beforehand so you do not interfere with that application. An alternative that is just as effective and less interfering but usually at a cost is a credit monitoring service.

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Our Rating System is based on a 5-Star system, where companies and services are rated out of a 5 Star maximum total. The final score for the company or service is based on a variety of factors, including but not limited to:

If you would like to provide feedback on a particular company or service or would like us to review your company and include you in our comparison matrix, please contact us at info@triplescore.org

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