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Credit Reports – Part I - Overview

The subject of credit reports can be overwhelming.  But does it have to be?  In this blog, LFS is going to provide an overview of credit reports and why lenders need them.

When you are applying for credit to buy additional or replacement equipment, lenders will seek to understand your financial history and make informed decisions on your ability to pay your lenders on time by pulling your personal credit report. 

A credit report is a summary of your credit history that includes your credit accounts, your payment history towards them and other information.  It may also show collections, suits, claims, judgements, lien registrations and other lender inquiries etc.

The contents of a credit report are translated into a credit score ranging from 300 – 900 which represents overall creditworthiness. A credit score is a snapshot of a credit report at the time the score was calculated, therefore, credit scores can change from time to time. Higher credit scores generally indicate that you have managed your credit accounts responsibly and provide a good basis to extend credit and, possibly, a lower interest rate.

The information on your credit report is provided by your creditors to two main credit bureaus:  Equifax and TransUnion.  These companies are private, and they receive their data regularly from lenders, utility companies, public records etc.  Based on the information provided to them, your credit score is then calculated.  

The credit scores can differ between Equifax and TransUnion for several reasons.  First, not every lender or creditor reports to both credit bureaus—they may only report to one of them.  Second, both credit bureaus use different credit scoring models so that varying weight is assigned to different factors.  Equifax uses an Equifax risk score model while TransUnion uses a CreditVision scoring model.   Third, some credit score models incorporate different payment information into the calculation such as mortgages or cell phone payments while others do not.  

The following is a guide to how lenders evaluate credit scores.  These should be used as a guide only and can differ between credit bureaus: 

300-559 = Poor, difficult to get approved for anything

560-659 = Fair, probably only approved for secured products like secured credit cards

660-724 = Good, reasonable chance of getting approved and may get good interest rates

725-759 = Very Good, likely to be approved for most credit products and will receive preferential interest rates

760+ = Excellent, likely to be approved for credit products

It is a good idea to check your credit score at least annually and there are several sources available:

  • Equifax:
  • TransUnion:
  • Your bank/credit union
  • Third parties such as Credit Karma
Understanding credit reports and the reason they are used can become overwhelming.  If you have any questions or wish to seek any advice regarding your credit score, reach out to LFS.  We’re here to help!