Credit Reports

As allowed by law, your credit history is available from credit reporting agencies to current and prospective creditors, landlords, insurance companies, and employers. A credit history can either expedite or hinder your ability to obtain credit. Moreover, a credit history can provide additional offers of credit to you.

There are three independent credit reporting agencies that collect information about consumers and their credit histories from public records, creditors, and other sources, including Equifax, Experian, and TransUnion.

It is important to request and review your personal credit report from each of the three credit reporting agencies at least once each year. Since each one is independently owned and operated, credit reporting information can vary from one agency to another.

Consumers can request free copies of their credit report every 12 months from each of the three main credit reporting agencies through AnnualCreditReport.com or through the mail at Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281 or by calling 877-322-8228. In addition, individuals have the right to receive a free copy of their credit report within sixty days of being turned down for credit, housing, insurance, or employment based on derogatory credit information. Those that are unemployed and looking for a job, are receiving welfare, or believe the credit file contains inaccuracies due to credit fraud can also request free credit reports.

If outdated or incorrect information is found after examining your credit report, fill out the Reinvestigation Request form sent with the credit report or send a letter listing each inaccurate item and specify precisely what is incorrect.

The credit reporting agency is required to investigate a request and contact the consumer within 30 days upon receipt of the correspondence. If there is no response within 30 days, follow up with the credit agency. If trying to obtain a loan, inform the credit reporting agency so that a "rush" investigation can be conducted.

Credit reporting agencies must delete information from credit reports if the consumer proves the reporting information is incorrect or the creditor providing the information can no longer verify it. If the credit bureau declares that its information is correct, call them to discuss it further or call the creditor directly. You have a right to place a 100-word statement in your report that the credit bureaus must provide to anyone who requests their report.

Credit Scores

Credit scores are commonly referred to as FICO scores after the company Fair Isaac who developed them using complex mathematical formulas. All consumers have a FICO credit score based on their respective credit history. FICO credit scores range from 300 to 850.

Who Uses Credit Scores

Mortgage, auto and credit card lenders, employers, insurance companies, landlords and others use credit scores in making decisions about doing business with us and under what terms. Note that some firms use credit scoring information exclusively. This may hurt some consumers since human attention and judgment are missing in the credit evaluation process.

Scoring Factors

While it is important to know your score, it is even more essential to understand the factors that go into computing a credit score, since an individual's credit score can increase or decrease very quickly.

Important factors that influence credit scores include:

• Payment History
• Amounts Owed
• Length of Credit History
• New Credit
• Types of Credit Utilized

High Credit Scores

High credit scores are generally those between 720 and 850. They are assigned to consumers who consistently pay bills on time, use credit moderately and responsibly. Consumers with high scores represent a low risk of future non-payment to lenders and tend to qualify for the lowest interest rates and fees. Note that a high credit score can drop very rapidly if you charge the maximum amount on your credit cards or pay just a few bills late.

Low Credit Scores

Low credit scores are generally those under 500. Low scores are typically assigned to consumers who consistently pay bills late, have insufficient credit history, or have heavy usage of available credit lines. Consumers with low scores represent a higher risk of future non-payment to lenders. They generally will be required to provide more documentation and pay much higher interest rates and fees than consumers with high credit scores.

Improving Your Score

There are several ways to improve your credit score including:

• Reduce or payoff your credit card balances.
• Pay bills on time.
• Only open new accounts that are necessary.