Get credit score
The credit scores are a three digit numerical representation of a consumer?s credit status at any time. This score is used by the lending companies like banks and other financial institutions to assess the creditworthiness of an applicant who had approached them for financial assistance. The score is determined by a credit bureau taking into consideration the various factors contained in the credit report. Their computer programs process the consumer?s spending details and other amounts owed and details such as if there are any law suits, arrests, bankruptcy or unpaid bills etc.
The resulting score reflects how well or bad the consumer?s credit history was and how good or bad his conduct towards money was and indicates how much credit he deserves to get. A greater score indicates a likelihood of getting a higher amount with lower interest rate with good terms. Any change in the information in the credit report is therefore bound to change the credit score. Normally the credit scores range from 350 to850. FICO scores also called credit rating are the standardized scores used by the lending agencies. The three nationwide credit reporting agencies namely Equifax, Experian and Trans Union make available the credit reports of consumers. They can be requested once in a year. The criterion followed by each differs and therefore the scores may vary depending upon the information contained therein. Three credit reporting agencies function as per the requirement of the US law governing consumer credits. In the US, The Fair Credit Reporting Act (FRCA) is enforced by the Federal Trade Commission (FTC) the nation?s primary agency for consumer protection. 723 is the median FICO credit score accepted nationwide.
Factors affecting credit score
The credit scores are normally affected in the following ratio: 35% by regularity of your payment history; 30% by the outstanding payments on debts; the duration of the credit history by 15%; any new credit acquired by 10% and the type of credit used by another 10%.
The possible reasons affecting a FICO score are many. The amount due on accounts may be too high; too many accounts with delinquency; having too many or too few national revolving accounts; proportion of balance with credit limit is too high; too many accounts with balance amounts; more consumer finance accounts; too many accounts opened in the last 12 months; too many recent enquiries in the last 12 months; lack of new bank or revolving account information; too short a credit history; negative public record such as judgments and collections, lack of information on recent installments; too few accounts paid as agreed; too recent date of enquiry; very few accounts with recent payment information etc.
CREDIT SCORE
The lending institutions get the information from the credit reporting company on payment of a fee with a request. The lenders also receive information regarding four major significant reasons why the credit score is not higher and such relevant information. By checking the credit score you can discover out how the lenders would weigh you credit history. The flaws if any may be rectified in the future payments which will make a positive entry in the credit report. The recent on time payments to rebuild the credit are viewed positively against the delayed payments in the past. This category normally influences the credit score by about 10 per cent.
The credit bureaus do not give out this information to the consumers directly. But some online creditors allow the consumer to view his credit history free of charge. The credit history is the vital factor that decides what loans the consumer qualifies for and the rate of interest thereon. It is a good idea to check the credit report well in advance before going in for any major credit. Any outstanding bills or payments may adversely affect the credit score and three consecutive payments can repair the bad credit considerably. This may result in a good credit with a much lower rate of interest.
The various financial institutions with whom the financial dealings have been carried out provide this information to the credit reporting agencies. The banks, credit card issuers and retailers should report the credit information to the credit bureaus and this is mandatory. More over they are held responsible for the accuracy of such information that is provided. They are also required by law to assist the credit bureaus in reinvestigations if any that may arise in future. Using credit reports by potential employers to make employment related decisions without the written consent of the applicant is also prevented bylaw.
The reinvestigation must be completed within 30 days from the date of request from the consumer. If the information still persists, the credit giver must indicate the fact in his report. When a creditor refuses an application, usually he is required to mention the name of the credit bureau that sent the credit report that caused the decision. Under the new law, they are also required to furnish the information such as phone number of the credit bureau and that the consumer can ask for a free copy of the credit report within 60days and that the consumer can dispute the accuracy of the information in the report.
Free credit reports
Under a few circumstances the consumer can get a free credit report from the three credit bureaus. They are: If you had been refused employment or credit due to the information contained in your credit report, you can request a free copy of your credit report for 60 days from the date of denial; If any entry in the credit report is disputed by you and that resulted in any change in the report, then the copy of the changed report should be sent free to you If you are currently unemployed and express the intention of applying for a new job within 60 days of the request; If you are receiving public welfare assistance If you believe that a fraud has caused an inaccurate entry in your credit file; If you are a resident of Colorado, Maryland, Massachusetts, New Jersey and Vermont, you will receive a free annual credit report;If you are a resident of Georgia, the free credit report will be sent to you twice a year.
Those do not fall under any of these categories can order the credit report for a fee of $8 from any of the three credit bureaus or can order it online. The legal recourse given to the US consumer against any fraud or inaccuracy offers absolute protection to the consumer who is always in need of using the credit score at any point of time in life.
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