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Your personal credit report acts as a gateway to your financial future.

Right now, your report may or may not be very promising. 

The good news is you’re in full control of what shows up on your credit report, so you ultimately decide that future. 

And with the right steps, you can open the way to the funding your business needs any time you need it.

But first, you need to obtain your credit report so that you know what you’re working with.

And that’s exactly what we’re going to help you with in this guide.

Below, we’ll cover:

  • The single best– and only officially recognized– way to obtain your credit report (for free)
  • How to read your credit report
  • How your credit score is calculated
  • Tips for cleaning up your credit report and improving your credit
  • And how to obtain business funding no matter what condition your personal credit is currently in

Obtain a business loan even with bad credit. Apply to see if you’re approved today: Apply Now

How to Obtain Your Credit Report for Free (Only Officially Recognized Method)

By law, U.S. citizens are entitled to obtain their credit report for free, once from each of the three major credit bureaus every 12 months.

However, many credit monitoring services will mask this fact behind a paywall of credit monitoring.

While credit monitoring can be useful, you’re not required to pay for monitoring to obtain your credit report. 

According to the FTC.gov, only one website is officially authorized to provide U.S. citizens with a free credit report.

That site is AnnualCreditReport.com (annualcreditreport.com/index.action). 

This means you do not have to pay any company or service for access to your credit report

If you haven’t already obtained a copy of one of your credit reports (no matter from which credit bureau), it’s suggested you have that as we go through the rest of this guide. 

Having it on hand will allow you to make notes and mark it up with areas that need attention, whether that’s improvement, removal, or simply some research. 

So, if you haven’t yet, head to AnnualCreditReport.com to get a free copy of your credit report. 

How to Read Your Personal Credit Report

Your credit report is a collection of your financial data (such payment history, current debt) gathered by a credit bureau, typically one of the major bureaus in Experian, Equifax, or TransUnion. 

Access to your credit report can be requested by you or anyone you authorize to run your credit for the purpose of using your credit score and/or report to help grade your financial eligibility. 

The information on your credit report is separated into 4 major sections:

  • Personal information
  • Credit history
  • Credit inquiries
  • Public records

Personal information

This section includes basic information such as your name, address, and phone numbers:

Understanding Your Personal Credit Report 1

Credit history

Credit history includes credit accounts, how much you owe (if anything), how long the account has been open (or closed), and whether you’ve ever been late on payments:

Understanding Your Personal Credit Report Example 2

Credit inquiries

When you apply for credit, that company or lender will run a hard inquiry on your credit, which impacts your credit score immediately up to 1 year and lasts on your credit report for up to 2 years. 

Those inquiries appear on your credit report in the proceeding section, typically just after your accounts:

Understanding Your Personal Credit Report 3

Public records

Finally, public records includes all assorted items such as judgments, liens, bankruptcies, and foreclosures

Once you understand how your report is structured and what is included in each section, it’s much easier to read through your report. 

However, there are some confusing terms that show up in credit reports you’ll want to know as well to make sure you understand everything that’s included in one of your credit reports.

Understanding Your Personal Credit Report 4

A quick breakdown of all those confusing credit report terms

Here’s a quick breakdown of some of the most common terms that may appear on your credit report:

  • Collection account: When a debt can’t be collected, large companies tend to sell that debt off to a debt collector. That account will show up as a collection account. 
  • Charge-off: You might notice that some of your credit accounts say “Charged-off”. This means the creditor has given up on trying to collect the debt and written that debt off as a loss on their taxes. That debt may or may not have then been sold to a debt collector, so check to see if that same debt shows up as another account under a different name. 
  • Open account: An open account includes any financial responsibility to which you pay off each month, such as a cell phone or utility bill. 
  • Revolving account: This includes revolving credit accounts to which typically a portion of the balance is paid each month such as credit cards.

For a list of additional terms and codes that may appear on your credit report, several credit bureaus and other financial institutions offer handy guides, such as Creditfirm.net

How to Calculate Your Credit Score

Now that you understand how to read your personal credit report, let’s dive into your credit score. 

Your credit score is a direct reflection of the state of your credit report. 

If you learn what factors impact your credit score and how to read your credit report, you can put that knowledge together to vastly improve your credit. And you can do it often within a relatively short period of time. 

*Getting 9002 or 9003 credit when running your credit score? Find out what it means and what you can do about it. 

How you credit score is calculated

Credit agencies such as FICO and VantageScores take the data collected by the various bureaus to calculate your score. 

After calculating the data, they produce a score somewhere between 300 and 850 based on various factors, one score for each major credit bureau. 

It’s these agencies that calculate and produce your score, not the credit bureaus themselves. This is an important differentiation that’s critical to understand if you want to fully comprehend how your credit report and score work.

What factors impact your score? 

So then, how is your credit score calculated? 

There are 5 major items from your credit report that impact your score and these are the items you should be looking for when reviewing your credit report for possible improvements.

Below, we’ve organized those major factors in order of importance. The percentage (out of 100% total) indicates how important that particular factor is in calculating your score:


  1. Payment history: 35%
  2. Credit utilization: 30%
  3. Credit history: 15%
  4. Credit mix: 10%
  5. New credit: 10%

Payment history: 35%

Easily the most important factor when it comes to calculating your credit score at 35% of your score, payment history accounts for just over ⅓ of your entire score’s calculation. 

This includes the number of on-time payments, late payments, and when those payments were made.

Suffice it to say, try to never be late on a payment. 

However, it’s also important to note that FICO and other agencies state a couple of late payments aren’t going to kill your score. 

It’s much more of a collection of factors taken together than any one thing dominating the scoring calculation. 

Credit utilization: 30%

The second of the two most important factors in calculating your credit score is credit utilization. Taken together, payment history and credit utilization account for 65% of your score 

Credit utilization takes into consideration the amount you owe, particularly what percentage of your available credit you’ve borrowed from. 

The less you’re borrowing from your available credit, the better your score.

For example, it’s generally advised to use no more than 20-30% of your available credit. If you have a $250 credit card, another $500 card, and a final card with a $1000 limit, your available credit is $1750. 

However, you should shoot for spending just $350-525 of that amount (the less the better). 

Credit history: 15%

Most notably, this takes into consideration the age of your credit accounts. 

The longer your accounts have been open, the better your credit score will be. However, this also accounts for how long you’ve been actively using those accounts.

Ideally, you should have multiple accounts open for a long period of time all which you’re also actively using, even if it’s only a small portion of the available credit.

Credit mix: 10%

Credit mix accounts for just 10% of your score’s calculation and it has to do with the combination of credit accounts you have on your report.

This one is a bit vague, but it’s generally suggested that a good mix of revolving and installment accounts of different types is best. 

The idea is that it indicates the borrower (you) can handle different types of credit, further increasing your credit score. 

New credit: 10%

New credit is the final element and it accounts for another 10% of your score.

This includes two different things: 

  1. New inquiries
  2. New credit accounts

First, soft inquiries don’t affect your credit. However, hard inquiries– such as when a car dealership or bank runs your credit for a loan– do impact your credit and stay on your credit report for up to 2 years. 

Second, opening several new accounts within a small window of time can also impact your score, as it can suggest that you’re in financial trouble. 

However, something else not often considered: opening new accounts lowers your average account age, which also impacts your credit history. 

4 Best Tips for Improving Your Credit


Now that we’ve covered what to look for on your credit report to start building toward a better credit score, we’ll cover some of our best tips for improving your credit.

Here are tips for improving your credit: 

1. Get credit monitoring

One of the single most important things you need to do if you’re serious about working on your credit is credit monitoring.

Credit monitoring, through sites such as Credit Karma, gives you a gateway into your credit activity. 

It will tell you not only when something has positively or negatively impacted your score, it will tell you when new items are added to your credit report, and help you identify credit fraud swiftly.

2. Remove old, erroneous, and fraudulent items

If you haven’t been keeping an eye on your credit report all this time, chances are that one or more items have landed on it that can be removed.

This includes items that: 

  1. simply old and should have fallen off
  2. Erroneous items such as credit accounts being listed twice, and
  3. Fraudulent items you might never have noticed

Examples of items you might see and be able to remove from your credit report include a UCC filing or UCC lien, which often stay on your credit after they’ve expired and can easily be removed, tax liens, or judgments

Sometimes, companies will run your credit without your authorization. If you notice an inquiry you know you did not permit, you can request to have it removed.

Another example is a credit account which you’ve paid off or has been charged off, both of which can often be removed in some cases. 

3. Pay on time, no matter what

As we talked about earlier, your payment history accounts for ⅓ of your entire credit score. 

That means making sure that you’re paying on time is one of the single most important things you can do to improve and maintain your credit score. 

Don’t forget that if you’re having trouble paying something on time, you can call most companies and request an extension. Many industries offer up to 2 extensions a year (or more), which means you have flexibility if need-be. 

4. Optimize your credit utilization

Similarly, credit utilization is nearly ⅓ of your entire score. 

Many aren’t aware of the importance that credit utilization plays in terms of your credit score. And, if they are, many more aren’t aware of just how much of their credit they should be spending. 

Most sources will suggest you keep your credit utilization below 30%. This is technically true. However, if you keep it to under 20%, the difference is significant and it requires just a little extra self-restraint.

Alternatively, you can look into whether you’re available for a credit limit increase from any of your credit cards. 

Obtain the Funding Your Business Needs (Even without Great Credit) with Excel Capital

You credit is a gateway to some of life’s most important moments: your first (or next), a new home, or obtaining a business loan to get your business off the ground. 

Now that you have your credit report in hand, you might be wondering what your options are.

If you’re working on improving your credit, don’t let that hold you back from obtaining the cash your business needs to move forward.

At Excel Capital, we’ve helped thousands of business owners find the perfect funding solution for them.

We know that every business owner is at a different stage and a lack of accessible capital (or good credit to get that capital) shouldn’t be the reason your business doesn’t succeed.

We’ll work with you to identify the perfect option to fit your business– and your goals– no matter where you are in your credit-building journey.

Click below to apply:

Get the capital your business needs. Apply with Excel Capital today: Apply Now