I've heard from more than a dozen readers who were confused by a recent column on how to clean up your credit history (also known as a credit report) and credit score.
So, let's clear the air.
First, your credit history also includes personal information, such as your name, Social Security number, current address, how long you've lived at your current address and past addresses.
Your credit history is primarily a list of all of the financial activity in your life. It lists all of the credit accounts you have ever opened, and how long they've been opened, including credit cards, a mortgage, home equity loan, student loans, car loans, personal loans (provided that those were reported to the credit-reporting bureaus), layaways and any other type of credit or lending account you might have.
In addition to listing each of these credit accounts, your current balance, and your highest balance, your credit history provides information on your payment history. If you've made every payment on time for as long as you've held the account, your credit history will note that fact. If you've missed a payment or two, it will list how late you were and whether the account is current or you are behind in your payments.
Your credit history will also include any charge-offs - an amount you owed that the creditor has decided you'll never pay, so the company has charged off the amount as a loss, and likely sold it to a collection agency. Also tax liens, court judgments and overdue child support.
Negative information like this will stay on your credit history for up to 10 years. Late payments will stay on your credit history for up to two years.
And finally, your credit history lists "inquiries." Every time a prospective lender, creditor, landlord, insurer or employer pulls a copy of your credit history to see how it looks, it's called an "inquiry."
Your credit score is a number from 300 to 850 (on the Fair Isaac FICO scale, which is the credit score most often used by mortgage lenders). The number is calculated by assigning a value to each piece of your credit history. The numbers are crunched together, with different pieces of your credit history assigned a different weighting.
For example, your payment history is worth 35 percent of your total score. That's why a late payment or two can substantially lower your credit score. The amount you owe is worth 30 percent of your score, which is why if you borrow up to the maximum limit on your credit cards it will lower your score.
