When applying for most loans, lenders will be sure to focus on your credit score – a three-digit number that plays an important role in qualifying you for loans, credit cards, apartment rentals, and more. However, your focus should be placed on something else instead: your credit payment history.
Your credit payment history is the most important factor affecting your credit score. Plus, unlike your credit score, it’s something you can actually review and manage on your own. In fact, here are four important steps that you should complete:
Step 1: Order a Credit Report
Getting a copy of your credit report is the best way to view your credit payment history.
The best way to do that is by visiting the government-authorized website annualcreditreport.com. You can go there to order a free credit report from any of the three big credit-reporting companies. Those companies are Equifax, Experian and TransUnion.
Step 2: Review Your History
Once you get a copy of your credit report, be sure to study your credit payment history. You’ll want to look for:
- Inaccurate personal information
- Unrecognized credit, loan and household-bill accounts
- Incorrect payment history entries
- Any inaccurate account status (such as a closed account marked as open)
- Incorrect credit limits and balances
- Any other errors
- Any unresolved debts (overdue balances that remain unpaid and may even be flagged for collection)
Your findings will tell you what kind of action you may need to take.
If you determine your history is accurate and positive, you can take comfort in knowing your credit score will reflect that. No action is necessary. You can skip Step 3 below and move on to Step 4.
However, if you see any blemishes, such as inaccurate entries or unresolved debts, those could have a negative impact on your credit score. Move on to Step 3 below.
Step 3: Repair Your History
You’ll want to address any credit information that is inaccurate or unresolved.
- If your credit report lists any incorrect items, be proactive. Contact the credit reporting company that supplied your report and request to have those items corrected. You also will need to contact each business that supplied wrong information, in order to request a correction. (For more detailed instructions about how to dispute errors, visit this Federal Trade Commission web page: https://www.consumer.ftc.gov/articles/disputing-errors-your-credit-reports.)
- If your credit report lists an unresolved item, then take action to remedy the situation. For example, if your report lists an open collection action, contact the creditor. Ask if you can negotiate for either new payment terms or a total payment that is less than what you actually owe. Then follow through with the new plan and pay down that debt as quickly as possible. This will help clean up your credit history so that you can apply for new credit with confidence.
Step 4: Keep Checking Your Credit History
Continue to order free copies of your credit report. Then compare each new report with your previous reports. You’ll want to make sure the reported information is accurate. That’s because it's always easier to correct inaccuracies sooner rather than later.
Do You Want to Get on the Road to Owning a Car or Home?
Building a more perfect credit history is key to making that happen. However, at Heartland Bank, we understand that financial situations can be very unique from one to another. It's why we offer our Money Matters Small Dollar Loan Program, which can assist you in building or repairing your personal credit.
Interested? Sign up for a class - offered year-round, both online and in-person!
This content is for informational purposes only. Readers should under no circ*mstances rely upon this information as a substitute for their own research or for obtaining specific advice from their own counsel.
FAQs
Credit History Is More Important Than Credit Score
Which credit score company matters most? ›
FICO scores are generally known to be the most widely used by lenders. But the credit-scoring model used may vary by lender. While FICO Score 8 is the most common, mortgage lenders might use FICO Score 2, 4 or 5. Auto lenders often use one of the FICO Auto Scores.
Which credit agency is more important? ›
There is no “best” credit bureau—all three bureaus can offer helpful information and tools to help you make financial decisions.
Which credit report do banks use most? ›
For the majority of lending decisions most lenders use your FICO score. Calculated by the data analytics company Fair Isaac Corporation, it's based on data from credit reports about your payment history, credit mix, length of credit history and other criteria.
What are the big 3 credit agencies that banks use to check an applicant's credit history? ›
Of the three main credit bureaus (Equifax, Experian, and TransUnion), none is considered better than the others. A lender may rely on a report from one bureau or all three bureaus to make its decisions about approving a loan.
Which of the 3 credit scores is most accurate? ›
While there's no exact answer to which credit score matters most, lenders have a clear favorite: FICO® Scores are used in over 90% of lending decisions. While that can help you narrow down which credit score to check, you'll still have to consider the reason why you're checking your credit score.
Which credit bureau is most checked? ›
Although Experian is the largest credit bureau in the U.S., TransUnion and Equifax are widely considered to be just as accurate and important. When it comes to credit scores, however, there is a clear winner: FICO® Score is used in 90% of lending decisions.
What credit score is needed to buy a house? ›
The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).
Is TransUnion or Equifax more important? ›
Neither your TransUnion or Equifax score is more or less accurate than the other. They're just calculated from slightly differing sources. Your Equifax credit score is likely lower due to reporting differences. Nonetheless, a “fair” score from TransUnion is typically “fair” across the board.
What company do banks use for credit score? ›
In conclusion. Credit card issuers and lenders may use one or more of the three major credit bureaus—Experian, TransUnion and Equifax—to help determine your eligibility for new credit card accounts, loans and more.
Lenders most commonly use the FICO® Score to make lending decisions, and in particular, the FICO® Score 8 is the most popular version for general use. If you've taken an interest in the health of your credit and how lenders will view it, checking your FICO® Score 8 is a smart place to start.
Which banks use TransUnion only? ›
Re: Credit Cards that only use TransUnion
Navy Fed, BMO harris, US Bank, Apple FCU, Teachers FCU, Elan Financial, The Apple Card, The GM card.
What is considered a good credit score? ›
Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.
Is 810 a good FICO score? ›
Your 810 FICO® Score falls in the range of scores, from 800 to 850, that is categorized as Exceptional. Your FICO® Score is well above the average credit score, and you are likely to receive easy approvals when applying for new credit. 21% of all consumers have FICO® Scores in the Exceptional range.
Why is my credit score so different between agencies? ›
This is because individual consumer reporting agencies, credit scoring companies, lenders and creditors may use slightly different formulas to calculate your credit scores. They might also weigh your information differently depending on the type of credit account for which you've applied.
Is Experian or FICO more accurate? ›
If you have a credit history that's been reported to the bureaus, you can have a credit report with each of the major bureaus. Those are TransUnion, Equifax and Experian. There isn't one “more accurate” report. The most accurate report in any individual case is the one that has the most complete information.
Do lenders look at TransUnion or Equifax? ›
When you are applying for a mortgage to buy a home, lenders will typically look at all of your credit history reports from the three major credit bureaus – Experian, Equifax, and TransUnion. In most cases, mortgage lenders will look at your FICO score. There are different FICO scoring models.
Why is my Experian score so much higher than TransUnion? ›
Credit scoring models can weigh certain information in your reports more heavily than other credit score factors. For example, one scoring model may put more emphasis on total credit usage than others. Because there are varied scoring models, you'll likely have different scores from different providers.
Why is my FICO score different from TransUnion and Equifax? ›
When the scores are significantly different across bureaus, it is likely the underlying data in the credit bureaus is different and thus driving that observed score difference.
