The Fair Credit Reporting Act covers consumers because their private information about them and their spending habits are collected and placed within these reports. These credit reports are then provided to lenders, credit card companies, insurance agencies and anyone who requests a copy to evaluate your application for credit.
A consumer can now receive a free copy of their reports every year to see exactly what information is placed about them on these reports. Any discrepancies or incorrect information can cause a consumer to have a low score, which hurts their chances of getting the credit or loans they need.
In order to protect the consumer, the Fair Credit Reporting Act was passed so that the consumer had the ability to change those discrepancies and fix their reports to reflect what is truly correct and get their credit scores raised.
When their scores reflect accurate information, their chances for getting the credit they need at a lower interest rate increase. To obtain your free copy of your credit reports, you can order it online, by phone or by filling out a form that allows you to order the report for free.
You'll need to provide some information to verify that you are who you say you are. Don't fall for websites that say they can get you a free copy of your report. Most of these sites are scams and will end up charging you for it in the long run.
Sometimes you'll be required to enroll in some program or purchase some product in order to get the free copy. It's best to deal with the credit reporting agencies yourself to receive your free copy by going to annual credit report's webpage.
After you receive your free copies and looked them over for items that you feel need to be changed, you can sign up with the credit reporting agencies to purchase another copy in 6 months or so, so that you can stay on top of what's being reported to the credit agencies.
The Fair Credit Reporting Act helps consumers by only allowing certain agencies to gain access to your credit information. Only lenders, credit card companies, insurers, employers and landlords can access your reports to determine eligibility for a loan, credit, etc. They cannot access your information without your consent.
When you apply for credit or a loan, you sign your consent when you sign the application. Potential employers will require you to sign a consent form before gaining employment. Exercise your right today to receive a free copy of your credit reports.
Your credit score is a numerical gauge of your ability to payback loans. Anytime you want to borrow money or get credit, the lender will look up this score to determine the risk involved in lending to you. The higher the score the better, so if you get a credit report and see a high score that means your credit is good, right?
Not necessarily so. The fact is there are several different credit scoring methods. Credit scores calculated from the same credit reports can differ substantially from credit scoring method to credit scoring method. So how can you ever know what your credit score really is? Well, luckily, 75% percent of lenders use FICO scores exclusively and you can purchase FICO scores yourself--you just have to know where to go.
FICO credit scoring was developed by Fair Isaac and Company as a numerical method of determining your credit worthiness. The scores range between 300 and 850 and are basically based on your past bill paying performance.
It would be easy if everyone used this scoring system, but the three major credit bureaus each have their own version of the FICO score: Equifax uses the Beacon system, TransUnion uses the Empirica system, and Experian uses the Experian/Fair Isaac system.
Althought they all use slightly different systems, all systems are based on the original FICO scoring method so generally your score should be equivalent from each. Of course, some lenders may also use their own scoring methods as well.
There is only one place where you can get your FICO score from all three bureaus and that is at www.myfico.com. If you order your credit score from anywhere else, again be aware that these scores are "FAKOs" (or "fake") and can differ considerably from your FICO credit scores.
Adding to the confusion is the credit bureaus themselves. Recently, Experian revealed that the national average credit score of its consumers is 678. This is very misleading to the average consumer. When you buy your credit report and score directly from Experians website, you are getting what they call the "PLUS Score," which is NOT a FICO score, and is NOT used by lenders anywhere. (Equifax is the exception--you can buy your FICO score directly from them at their website; however, the only place to get all three scores together is at www.myfico.com.) The 678 PLUS Score reported by Experian is actually the average of consumers' PLUS Scores, not their FICO Scores.
Clearly, the PLUS Score (and all Non-FICO scores) are useless. Not only that, but such hype misleads consumers into purchasing their PLUS Score thinking that they are getting the same credit score that their lender will use. Non-FICO scores are worthless not matter what the credit bureaus or any website selling non-FICO scores claim. Even a few points difference in your credit score can mean confronting the reality of the loss of thousands of dollars out of your pocket--a loss that you probably didn't plan for. The next time you want the most accurate credit score available, do yourself a favor and get the industry standard: the FICO credit score.
Both William Brooks & Lee Dobbins are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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