credit fairy

Understanding Credit
The Credit Fairy has information and resources to help you increase your knowledge and build your credit rating.

Your credit score is used by lenders and others to predict the likelihood of a default.  Before you can take steps to improving and building your credit you must first understand it.

Credit Basics– What is credit, what is a credit history and how it affects your life.  Types of credit.

What’s in your credit report and what’s not in your report.  Glossary of credit terms.

Know your credit score and the factors that go into your credit score.  What’s not in your score.

Managing your credit and Setting credit goals.  Fixing your report. Read the fine print. Re-establishing credit after bankruptcy, divorce, foreclosure, default.  Get a credit card regardless of credit, compare offers.

Using Federal Laws to your benefit.

    The laws allows you to dispute items on your credit reports.

The law gives consumers the power to affect the information and retain professional help in doing so.  Our associates have decades of experience dealing with the credit reporting system.  They understand the system and can save you time and money. We do all the work for you and make sure your credit reports don’t have any mistakes or false negatives and other inaccuracies which will can effect credit scores and  borrowing opportunities.  Let the Credit Fairy help. Free Credit Repair Consultation

Does the information on your report show information that is…

  • Erroneous?
  • False?
  • Inflated?
  • Questionable?

Erroneous derogatory Information …

  • No Credit History
  • Too Many Inquiries
  • Charge-Off Errors
  • Fraudulent Collections
  • Late Payment Errors
  • Identity Theft Problems
  • Mechanics Liens
  • Duplicates Entries
  • Short Sale/Foreclosures
  • Wrong Personal Info
  • Expired Debts
  • Outdated Information
  • Ex-Husband/Ex-Wife

Credit Basics

What is Credit?

Credit means having the resources and ability to go into debt so that you can buy now and pay later. You borrow money from a bank or other lender or creditor, and agree to pay it back over a period of time. You pay a fee, usually an interest fee, for this service.

Today, banks and other lenders make it simple to use credit to buy just about anything. With so much access to credit, getting and abusing it can be easy. But, establishing and maintaining good credit is key to ensuring strong long-term financial health.

Poor credit can be fixed. Even if you’ve made some unhealthy financial decisions in the past, there are many things you can do to improve your credit. This site can help you find out your credit score, learn what it means, and help you to improve it so you can achieve your personal financial goals.

What is a Credit History?

Your credit history is an ongoing record of much of your financial life. It tracks the debt you have incurred with creditors including banks, stores, student loans, mortgages, car loans, and also includes things like your employment history and past addresses.

In addition, your credit history also tracks how you manage your debt. Late or missed payments are recorded as well as your debt-to-credit ratio.

Your credit history affects your credit and your financial future. Creditors look at your financial history using your credit report to determine how much money they are willing to lend you, and at what interest rate and terms.

There are many different types of credit including home mortgages car loans, small business loans or student loans and of course, credit cards. Remember, having a credit card means that the credit card company has agreed to lend you money. You are required pay that money back, usually with interest, for the convenience of borrowing those funds. It is not free money. There are two main types of credit cards:

With a charge card, you are required to pay the entire balance you spend at the end of each month. For example, if you spend $300, you are required to pay the entire $300 when you get your bill.

Revolving credit cards usually provide you a set amount of money, or credit limit, to use over an extended period of time. You can continue to use your card as long as you don’t go over your credit limit, and while some payment is required each month, you don’t have to pay the entire balance off at the end of each month.

Though there are only two main types of credit cards, every credit card is different in the credit limit, interest rate, and other fees and terms that they offer to customers. Learn more about these important details in Read the Fine Print.

Call the Credit Fairy at 855-994-4673 or fill in a short form for a free consultation.

What’s in a Credit Report

What is in my credit report?

Your credit history is an ongoing record of information detailing which credit cards or loans you have opened and/or closed over time, whether or not you have been late with any payments, and more. All of this information is available in a document called a credit report. What exactly goes into your credit report?

Personal Information

First, your personal information including your name, Social Security Number (SSN), birth date and current and past addresses is listed. Current and former places of employment are sometimes included, along with any important “alerts” including whether or not you have been the victim of identity theft and if you are currently serving in active duty in the military.

Credit History

Your report also includes a comprehensive listing of all trade lines loans, credit cards, mortgages and other outstanding debt currently open in your name. Any credit cards or loans you have closed or already paid off (called inactive accounts) will remain on your credit report for seven to ten years. Your bank account information (savings and checking account balances, for instance), is not included; however, if you have overdrawn your bank account it can be noted in your credit report.

Each open loan or credit card is listed, along with the amount of money you owe on each. Other information including outstanding balances, monthly payment amounts, and credit limits are also included, along with the name of each lender and the account numbers for each loan.

Late payments are recorded in your report in the past-due column, along with what is called your account status i.e., whether your account is in good standing or has been reported to a collection agency for late or non-payment.


You are entitled to one free copy of your credit report annually, and can access your report anytime thereafter for a small fee. These are called “administrative inquiries” and do not affect your credit report or overall credit score. However, anytime a lender or other entity “pulls,” or requests a copy of, your credit report, it is noted and recorded in your report for one year. Too many inquiries over a 12-month period can negatively impact your report, possibly indicating to other potential lenders that you may be applying for too many credit cards or loans and could become financially over-extended.

Matters of Public Record


Official information regarding any liens currently open against you (for late or non-payment on your taxes), bankruptcies you may have declared in the past 10 years, lawsuits or legal judgments filed against you, or any child support requirements, are also included in your credit report. This information can stay on your credit report for up to seven years.

What is Not In Your Report?

Your credit report includes lots of information on your accounts, loans, etc., but it does not include what is sometimes referred to as your credit score. Your credit score is calculated based on the information included in your credit report but it is not a part of the actual report itself.

Your credit report also does not include information on your race, gender, ethnicity, religion, marital status, medical or criminal history, or political affiliation.


Credit Report Glossary


Account Number: Your account number may be abbreviated or scrambled when it appears on your credit report. This is for security purposes.
Charge-off: An account maybe labeled this way if it has gone unpaid for an extended period of time, usually 180 days. At this point, the creditor may write off the account as “bad debt” for tax purposes. However, the debt still exists and is collectable with fees and interest.
Credit Limit: The maximum amount of credit extended to you on a particular account, as determined by the lender.

Credit Summary: Sometimes referred to as “trade lines,” this section lists the total number of open and closed accounts in your name, as well as those accounts’ balances and whether there are delinquencies.
Creditor: The business or person who has loaned you money.
Geographic Locator Codes: Similar to a ZIP code, this piece of data from the U.S. Census Bureau identifies your state, Metropolitan Statistical Area, county, tract and block group as defined by your reported address.
High Balance: This is the highest amount of money you have ever owed on a particular account.
Inquiries: This section includes a listing of everyone who has asked to review your credit report. It can include landlords, potential lenders, employers, and insurers. Only inquiries resulting from your application for a credit card, mortgage, car loan, etc. are factored into your credit score.
Installment Loan: This is a credit account that you pay a set amount every month for a period of time. For example, car and student loans are installment loans.
Last Reported: This is the last time your creditor updated the information about your account.
Mortgage: When you buy a house or condo, the loan document is recorded in official records, called a mortgage. A lien is placed on the property until the loan is paid off.
Paid As Agreed: This statement means that your account is in good standing because you’ve made all payments on time.
Payment Grid: This calendar shows creditors and lenders how many late payments you’ve made over the course of a loan. The information may be incomplete if the credit bureau did not receive information from your creditor.
Payment Rating: On a scale of one to nine, this data illustrates how often you pay your bills on time. A score of “1” means that you always pay on time, while “9” means you rarely do. If the number is preceded by an “I,” this means the rating is for an installment account. If there’s an “R,” the rating is for a revolving account.
Payment Scale: This piece of information illustrates the number of times you’ve paid your bills 30, 60 or 90 days after the due date.
Personal Information: This section may include your full name and Social Security Number (SSN), as well as your past and current employers, telephone numbers and addresses. If you notice out-of-date or incorrect information, be sure to have it corrected.
Personal Statement: You have the option to include a short statement on your credit report for the purposes of explaining a situation that affects your credit history. For example, the statement could explain a dispute with a creditor or notify others that you were a victim of identity theft. The statement can be viewed by anyone with access to your report and will remain there for two years.
Potentially Negative Items: This section includes things that potential creditors may find unsatisfactory. They include bankruptcies, liens and judgment information obtained from court records.
Promotional Inquiry: This is a request to view your credit report on behalf of someone who wants to send you an unsolicited offer for credit. These inquiries are not included in the calculation of your credit score and only appear on your copy of your credit report.
Public Records: This section is populated with information from federal, district, state and county court records. It can include information about bankruptcies, tax liens, and monetary judgments. In some states, overdue child support records will also be listed here. These items stay on your credit report for seven to 10 years or more.
Report Number (Experian Only): This is a unique number assigned by Experian that references your credit report. If you need to contact Experian about your report, it may be helpful to share this number.
Responsibility: This piece of data indicates whether the credit account is in one person’s name (individual), or joint or co-signed with another person. If the account is joint or co-signed, it will appear on both people’s credit reports and any late payments or defaults will negatively affect both people’s credit scores.
Revolving Account: This is a credit account in which you have a per-determined limit and are authorized to borrow up to that limit at any time. Credit cards and Home Equity Lines of Credit (HELOC) are an example of this type of account.
Terms: This describes your agreement with your credit as to how often you’ll make payments on an account and for how long.
Get Professional Credit Repair Help

Call the Credit Fairy at 855-994-4673 or fill in a short form for a free consultation.

Know Your Credit Score

What is my credit score?

Your credit report includes all the data available regarding your credit cards, loans, mortgages, etc., but it doesn’t include a piece of information which may actually have the most influence on whether you will be approved for a loan or credit card and under what terms your credit score. That is because different companies produce different scores from your credit report using different formulas.

Your credit score is determined by a complex mathematical formula that synthesizes all the information contained in your credit report and calculates it into one number usually between 300-850. The higher your number or score the less investment risk you pose in the eyes of potential lenders or creditors. Your score may be slightly different depending upon which credit agency is doing the calculations (remember, each credit report from each company may also be slightly different), but in general, they will be within a few “points” of one another.

While you are entitled to one free credit report per year under the Fair and Accurate Credit Transaction Act, you have to pay a nominal fee to obtain your credit score from each of the three credit reporting agencies or from Fair Isaac.  Again, your credit score is not automatically included in your credit report.

How is Your Score Calculated?

The formula is complex and a trade secret, but basically, points are awarded or deducted towards your score in a number of key areas, including your bill-paying history; the number, type and longevity of your loans or credit cards; any collection actions taken against you; and how much total outstanding debt you may have. Late payments have a negative impact on your credit score, as do any tax liens or other outstanding legal judgments against you.

Factors that may influence your score include:

  • Lots of high credit card balances (more than 50 percent maximum credit limit)
  • Too many new accounts opened in the past year (this may indicate you owe too much money or can’t pay off your debts)
  • Not enough credit (short credit history)
  • Too many inquiries on your credit report (remember, these generally remain on your report for two years per inquiry)

What Your Credit Score Does Not Include

  •     Race or color
  •     Ethnicity or national Origin
  •     Gender
  •     Marital status
  •     Political affiliation
  •     Religion

The credit score calculation also does not take into account your monthly or annual income, whether you have a job, your current bank account holdings, or the down payment you have made on your mortgage.
Fixing your credit report.

Call the Credit Fairy at 855-994-4673 or fill in a short form for a free consultation.


Managing Your Credit

How do I manage my credit?

Maintaining Healthy Credit

Today it seems almost too easy to get credit. Credit card companies will make it easy for you to use their cards. If you are not careful credit can become a trap. When you are in a hole the first thing you must do is stop digging. Here are some suggestions to help you manage your credit and use debt as a vehicle to achieve your goals.

Identify Your Credit Goals

Establish a few short- and long-term goals. Seeing a “light” at the end of your financial tunnel may make it easier to stick to your budget. Do you want to save for vacation? Purchase a home? Buy a car? Knowing why you are budgeting your money can really help you stay on track and not get discouraged.

Create a budget that includes your monthly and yearly expenses like rent, car payments, etc. Don’t forget to include annual expenses like insurance premiums and taxes. Getting it all down on paper is the first step towards establishing a budget that is realistic and viable for the long haul.

Once you’ve established your budget, don’t open new credit cards or apply for other loans unless they “fit” with your overall budget plan. Remember that numbers don’t lie, so if your monthly budget is $3,000, and your expenses are using up all of your disposable income, taking on another loan will definitely not help you reach your overall financial goals. Live within your means, not beyond them.

Use your credit cards only for things you can truly afford, and make sure you pay your bills on time, every month. Try not to “max out” your cards. A good rule of thumb is not to let your credit card balances exceed 20 percent of your annual income (or 10 percent of your monthly income). Try to resist impulse buying.

There is No Quick Fix for Credit Problems

Beware of credit “repair” agencies who promise to boost your credit score! They may use a variety of tactics that may increase your score temporarily (enough time for you to be fraudulently approved for that car loan you want), but they cannot permanently “erase” any credit problems you may have. Getting involved with some of these companies can be trouble. As always, steer clear of companies who make promises that sound too good to be true!

Be careful when transferring your balances to another credit card. Card companies promising lower APR rates may not guarantee those rates forever, and you could wind up paying more in fees and interest down the road if the terms of the offer call for a hike in your interest rate after you’ve transferred your balances.

Try to pay more than the minimum balance due on your credit card bills each month. Paying even $10 more can really save you a lot in finance charges and interest in the long run.

Pay attention to the interest rates on your credit cards—the lower the rate, the better. Shop around to secure the lowest rate.


Call the Credit Fairy at 855-994-4673 or fill in a short form for a free consultation.