What Is A Credit Report?
A credit report is a record of your financial history, detailing everything from auto loans and credit card balances to liens and bankruptcies. Generally, the information found on your credit report remains on your report for seven years. And, while not an official part of your credit report, credit scores are “grades” based on the report’s information.

For today’s home buyers and refinancing households, having a good credit score can mean access to lower mortgage rates and mortgage programs with smaller downpayment requirements.
However, your credit scores are used in other aspects of life as well:

• Insurers can use your credit score to determine your premium schedules.
• Employers can use your credit score to determine whether to hire, promote, or reassign you.
• Landlords can use your credit score to determine whether to rent you a house or apartment.
• Government and judicial agencies can use your credit score for program eligibilities and legal matters.

Your credit report is your first impression in the financial world. It will often be used to estimate your level of financial responsibility. This is one of the many reasons why keeping your credit score high is paramount.

Understanding what’s in your credit report is an important part of managing your finances. You are entitled to a free credit report once per year from each of the three major credit reporting bureaus. You are also entitled to a free credit report if you are denied credit or business and personal loans.

To obtain a copy of your credit report, you may contact one of the three major credit bureaus (Equifax, Experian, TransUnion).

Once you receive your credit report, Exodus Financial can help you understand what’s on your report. During a Secure and Confidential Credit Report Review with a certified credit counselor, you can expect:

  • A complete review to help you read and understand what’s on your credit report.
  • An individualized plan listing steps to take to improve your credit report and/or score.
  • Information on your rights with regard to your credit report.
  • Specific tools and resources to fix errors on your report.

When it comes to credit reports, what you don’t know CAN hurt you. Your credit report is used in many areas of your life:

  • By lenders to determine rates for credit cards, home and car loans.
  • By employers as part of the hiring process.
  • By landlords making rental decisions.
  • By insurance companies in determining your premium rates.

What Is Credit Utilization?

Credit Utilization is the ratio of your outstanding credit card balances to your credit card limits. It measures the amount of available credit you are using.2 1 For example, if your balance is $300 and your credit limit is $1,000, then your credit utilization for that credit card is 30%. If you’re adding $500 per month of new charges on your card and your limit is $1,000, you’ll have a utilization rate of 50%.

To calculate your credit utilization ratio, simply divide your credit card balance by your credit limit, then multiply by 100.3 The lower your credit utilization percentage, the better. A low credit utilization shows that you’re only using a small amount of the credit that’s been loaned to you.

Five major factors have an influence on your FICO credit score, the most commonly used credit scoring model:

  • Payment history (35%)
  • Level of debt/credit utilization (30%)
  • The age of credit (15%)
  • Mix of credit (10%)
  • Credit inquiries (10%)4

Your credit score—including your credit utilization ratio—is calculated based on the most recent information posted on your credit report. Because credit card information is updated on your credit report based on billing cycles and not in real time, your credit score may not reflect the most recent changes to your credit card balance and credit limit.1

NOTE: The balance and credit limit as of your credit card account statement closing date is what’s used to calculate your credit score.

Have a quick question?

Call (301) 772-0777 to speak with a certified credit counselor to get trustworthy answers to your questions.