
On the path to building healthy credit, you may find yourself with questions. TransUnion is here with answers to help you build confidence about credit scores and credit reports as you work toward your goals.
We compiled this list of questions based on feedback from surveys on our website as well as outside research. We hope these answers offer you the insights you need to make sense of your credit report and score:
You can get free copies of your credit report each week from the three nationwide credit reporting agencies, Equifax, Experian and TransUnion from annualcreditreport.com. You qualify for an additional credit report from TransUnion if you were denied credit, are unemployed or have reason to believe you are the victim of fraud.
There are two types of inquiries you should understand: hard inquiries and soft inquiries.
Hard inquiries may appear on your credit report when a company or person accesses your credit report in connection with an application for credit. They can only do so with a permissible purpose, like when you apply for a line of credit. Hard inquiries can impact your credit score. Hard inquiries can stay on your credit report for up to two years. There are two types of inquiries you should understand: hard inquiries and soft inquiries.
Soft inquiries can occur when a company receives limited information from your credit report to make a promotional offer. Or you may have a soft inquiry when a company pulls your report for an account review. This is when a company you already do business with reviews your credit to make sure you continue to meet the conditions of the account.
Other examples of soft inquiries include insurers checking your credit report for underwriting purposes or potential employers verifying your credit history. A soft inquiry may also appear on your credit report when you check your own report or subscribe to credit monitoring services.
Account review inquiries can stay on your credit report for two years. Promotional inquiries will stay on your report for one year. Unlike hard inquiries, most soft inquiries can only be seen by you and don’t have an effect on your credit score. Only you can see all the soft inquiries on your credit report. Users of the same product or in the same industry can only see soft inquiries of that product or industry. For instance, insurance companies can see other insurance soft inquiries on your credit report, but they can't see other types of soft inquiries. You can see your hard and soft inquiries by ordering your credit reports from annualcreditreport.com.
Late payments stay on your credit report for up to seven years from the date of the original delinquency. Your payment history is a major credit score factor, so staying on top of due dates is important for your credit health. When possible, it can be smart to set up automatic payments for your bills and loans.
Similar to late payments, most collections stay on your credit report for up to seven years after the date of the original delinquency, whether the collection account is paid or unpaid. An exception is medical debt collections, which will be removed from your credit report if paid. Also, in the first half of 2023, medical collection debt under $500 will no longer appear on your credit report. If you have questions about an account in collections, you can find the contact information for the collections agency on your credit report.
The credit score ranges for two of the major score providers, FICO® and VantageScore®, are 300 – 850. While 850 is the highest score possible, nothing special unlocks if you hit that number. You should continue to build healthy credit habits and reach for the best possible score you can achieve for your credit and financial goals.
You have to be at least 18 to get a credit card. If you’re under 21, the Credit CARD Act of 2009 stipulates you also need to prove you have your own income to be approved without a co-signer. However, if you’re looking to help your young adult build credit history before the age of 18, you can add them as an authorized user on your credit card accounts. This may allow them to inherit the good history of the account going forward. You want to make sure you’re continuing to keep the account in good standing.
A secured credit card can be a good first credit product for people with a limited credit history. With a secured credit card, lenders require a security deposit. For some card issuers, the more you deposit, the higher your credit limit. Typically, the deposit is refunded when you pay your balance in full and close your account.
With continued good habits, some lenders will gradually allow you to earn back your deposit through statement credits. If you’ve established a positive credit history with your secured card, you may then be able to open up a standard credit card account.
Always read the rates and disclosure documents in full before applying so you fully understand the terms of your credit card.
Credit reporting agencies don’t make lending decisions. If you’re denied credit, your lender is required to send you a letter called an adverse action notice. The letter will explain why your application was denied. There are many reasons why you may be denied credit, but common causes include having too many recent inquiries, having a limited credit history or having too low a credit score. You can contact the credit card issuer for more information about your specific application.
There’s no secret or quick fix when it comes to rebuilding your credit. Don’t get discouraged. Anyone can achieve a good credit history by consistently practicing sound credit and financial habits.
Here are some important credit habits to practice:
For more credit tips, check out our guide to how to read your credit report. It breaks down each section and explains how the information may impact your credit score.
Disclaimer: The information posted to this blog was accurate at the time it was initially published. We do not guarantee the accuracy or completeness of the information provided. The information contained in the TransUnion blog is provided for educational purposes only and does not constitute legal or financial advice. You should consult your own attorney or financial adviser regarding your particular situation. This site is governed by the TransUnion Interactive privacy policy located here.
The credit scores provided are based on the VantageScore® 3.0 model. Lenders use a variety of credit scores and are likely to use a credit score different from VantageScore® 3.0 to assess your creditworthiness.
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