What Do Lenders See On Your Credit Report

What affects your credit report? It depends on the lender and loan type - there's no single standard.

Some things help or hurt your chances almost everywhere. Your FICO score (the most common credit rating) matters a lot. These scores run from 300 to 850, with 670+ considered good. With a much lower score, you'll likely pay higher interest rates or might not get approved at all.

How credit scores work

Credit scores come from five main things: how you pay bills, how much you owe, how long you've had credit, new accounts, and the types of credit you use.

Your payment history

Lenders want their money back - simple as that. That's why your payment history matters most, making up 35% of your FICO score.

Nobody wants to lend money to someone who hasn't paid others back.

Late or missed payments, defaults, bankruptcies, or accounts sent to collections all hurt your chances. You might still get a loan with a few mistakes, but expect less money and higher interest rates.

Your amounts owed

Owing a lot of debt worries lenders. It's odd, but having less debt actually helps you get credit. Lenders think someone with lots of existing debt might struggle with payments.

What counts as "a lot" depends on you. Lenders look at your credit utilization ratio - how much debt you have compared to your available credit. Lower is better. This makes up 30% of your FICO score.

Credit history length

A good track record matters. Lenders like seeing accounts you've kept in good standing for a long time. Your credit history length is 15% of your FICO score.

Your credit mix

Having different types of credit (cards, car loans, mortgages) helps your score. Lenders like seeing you handle various credit types responsibly. But don't open new accounts just for your score. FICO gives this 10% weight.

New accounts

Opening many accounts quickly raises red flags. Lenders wonder why you need so much credit and if you could repay everything if maxed out. This is 10% of your score.

Think twice before opening an account for a free gift or small discount.

What else matters to lenders?

Your credit score isn't everything. Lenders also look at:

• Your income

• Assets like bank accounts

• Job history

• Loan purpose

• Collateral (for secured loans like mortgages or car loans)

Credit cards are usually unsecured, so your creditworthiness is all that matters.

Getting your credit report

You can get free reports yearly from Equifax and TransUnion.

Are all credit reports the same?

Not always. Some companies report just one or two, or none. It's smart to check all three reports.

Getting your credit score

Many banks and credit card companies offer free scores. Some websites do too. Remember that you have multiple credit scores, so what you see might differ from what lenders use.

What's in a credit report?

Your report has these parts:

Identifying Information

This section shows your name, address, Social Insurance Number, and birth date. This doesn't affect your credit scores.

Credit Account Info

This shows accounts reported by your creditors:

• Types of accounts (credit cards, mortgages, student loans, car loans)

• When you opened them

• Credit limits or loan amounts

• Current balances

• Payment history

Some accounts might not show up if they're closed and have dropped off, or if the creditor doesn't report to Equifax.

Inquiries

There are two types:

"Soft" inquiries happen when:

• You check your own credit

• Companies send pre-approved offers

• Your current lenders review your accounts

These don't hurt your scores, so checking your own reports is safe.

"Hard" inquiries happen when you apply for:

• New loans

• Credit cards

• Phone contracts

These stay on your report for up to two years and can affect your scores.

Bankruptcies

These stick around for 7-10 years:

• Chapter 7: up to 10 years

• Chapter 13: up to 7 years

Unpaid Support Payments

Missed child support or alimony can stay on your report for up to 7 years, even after you pay them. Paying helps reduce the impact, but doesn't remove them.

Collections

Many types of accounts can go to collections:

• Credit accounts

• Bank accounts

• Retail stores

• Cable and phone bills

• Medical bills (though paid medical collections no longer appear as of July 2022)

• Unpaid rent

These can stay on your report for up to 7 years.

What matters most for your credit

Your credit affects almost everything you borrow. While different lenders look for different things, some basics matter everywhere.

Your credit score (especially FICO) counts a lot. These scores run from 300 to 850, with 670+ considered good. Lower scores mean higher interest or no approval.

Five main things build your score:

• Payment history (35%) - Do you pay on time?

• Debt amounts (30%) - How much do you owe compared to your limits?

• Credit age (15%) - How long have you had accounts?

• Credit mix (10%) - Do you handle different loan types well?

• New accounts (10%) - Opening many accounts quickly looks risky

Beyond scores, lenders check your income, assets, job history, and why you want the loan.

You can get free reports yearly from Equifax and TransUnion. What you'll see includes your personal info, account details, credit inquiries, and any negative marks like bankruptcies or collections.

Check your reports regularly. Mistakes happen, and knowing where you stand helps you make better money choices.