Know Your Score - An Overview of Credit
People talk about "bad" credit and "good" credit all the time, but it is hard to tell where your standing is. There are many sites out there that look legitimate however there are a lot of scams relating to obtaining a "free credit report". Rather than going through the process to find out what the score is, many people disregard credit reporting only to find out that they have terrible scores later on due to being rejected for a car or house loan. To stay on top of finances, it is recommended to use government resources to obtain what you have the right to – a free annual credit report.
History of Credit Reporting
The Fair Credit Reporting Act (FCRA) was passed in 1970. It is now enforced by the Federal Trade Commission (FTC). Due to an amendment in 2003, consumers are now entitled to a free annual credit report, which is supplied via the three major consumer reporting agencies of Experian, TransUnion, and Equifax. Today, consumers have the right to receive their annual reports. They now also have the right to dispute inaccurate information.
What's a Credit Score?
A credit score is usually a number between 300 and 850, which is the result of a mathematical formula taking multiple aspects into account. Because there are three different agencies, three slightly different scores may result, but the higher the credit score, the better. Credit scores change on a regular basis, depending on different actions such as taking new loans, missing payments or changing accounts. A free report can be received annually however more frequent reports can be purchased directly from the consumer reporting agencies.
How Credit Reports and Scores are Used
Credit reports can be used when applying for a loan, getting insurance, getting a mortgage or even applying to a job. Information on your credit report can remain on it for seven years. Bankruptcy information can be kept for 10 years and unpaid tax debt can be kept for 15 years. Due to the negative effects of bad information, it is best to be vigilant of identity theft.
Maintaining or Improving Credit Tips
Probably the best way to improve a credit score is to pay your bills on time. That may not be enough, however, so it is also important to analyze the credit report for any inaccurate information. If you are in debt, be aware of any "free" credit reporting scams. Monitoring your credit report regularly and setting up a budget to get rid of any previously held debt will help in increasing your credit score and in turn will make it easier to obtain loans and credit cards.
- What is a Credit Report? – This page explains what a credit report is and why it matters.
- FAQ's – Credit Reports – This is a very comprehensive list of most common credit reporting questions. It has information on credit reporting errors and who uses the credit report.
- Negative Information Reflected in Your Credit Report – Bad information can stay on your credit report for a great deal of time. This site has some information about your rights.
- Fair Credit Reporting Regulations – Fair Credit Reporting Act – This is the actual law regarding fair credit reporting.
- Why is My Credit Report Important? - What does "bad" credit or "good" credit mean? This site has the answer.
- Small Business Financing and Credit Reporting – If you are applying for a small business loan, you may want to take your credit report and this other information into account.
- Your Credit Scores – This pamphlet describes examples of credit improvements and changes in credit scores.
- My Money: Borrowing – This link includes advice on how to borrow money and what needs to be done before applying for a loan.
- Top 10 Insurers Using Credit Scores – This is a list of some major car insurers and what they use your credit score for.
- Credit Check and Student Loans – Credit scores do not affect student loans, but student loans can affect the credit score.
- Don't Get Cheated By Credit Report Scheme – This article is regarding the common issue of using sites that are not government-issued for the free credit report.
- Rights Under The Fair Credit Reporting Act – An article that serves as a guide to your rights under the Fair Credit Reporting Act.