Face the Fear of the Terrifying Credit Score

Your credit score isn't something to be afraid of.

For some there is something more terrifying than a spooky monster lurking around this Halloween - it’s their credit score! Thankfully, your personal finance doesn’t have to be a horror story worthy of the frightful holiday season. The Equifax Finance Blog is here to help you understand how it all works and show you that your credit doesn’t have to be scary at all in the new article, “How Does Equifax Get the Information for My Credit Report?”

First, it is important to understand the overall process of credit reporting. Let’s say you are planning on buying a new home and you are very excited about all the new things you want to purchase, from patio furniture to light fixtures. In preparation, you go open a store credit at your closest home improvement store. Although you’re not actually purchasing anything yet, the simple step of filling out the application for a store credit starts a process behind the scenes that affects your personal finances.

The store, known as the ‘creditor,’ will then report that you have applied for a line of credit to a credit reporting agency, such as Equifax, Experian and/or TransUnion. These agencies take this information and compile it into a file, which contains all the information previously collected in your name. This file is your credit report.

Then when the day comes for you go to get your loan for that new dream home, your potential home lender will pull your credit report and credit score. The credit score is calculated using five major sections of your credit report. The number of new accounts and inquiries you have made, such as the new store credit card recently acquired, will actually account for 10 to 12 percent of your overall credit score. Simple financial actions like that impact your credit report, and in turn much of your borrowing power.

Understanding how credit works will go a long way to making you a better consumer, and give you one less thing to be afraid of. Link over to the Equifax Finance Blog today and get all of your questions answered so you don’t have to live in fear of your credit score anymore.