A person's creditworthiness is typically judged by their credit score, which is a statistical analysis of a person's credit history designed to predict whether or not a person will pay his or her bills. A credit score usually ranges between 300 and 850 and is based mostly on information collected from the three major credit reporting agencies - Equifax, Experian and TransUnion. The lower the score, the less likely a person is to obtain loans and other credit or to obtain them on favorable terms. Persons who are denied credit or good terms should take steps to ensure that their credit report is accurate and to raise their credit score in the future.
Free Annual Credit Reports
Residents of the United States are entitled to one free copy of their credit report from each credit reporting agency per year pursuant to the Fair and Accurate Credit Transactions Act (FACT), an amendment to the Fair Credit Reporting Act. To obtain a credit report, the person can go to annualcreditreport.com, call 1-877-322-8338, or mail an Annual Credit Report Request From. If a person wishes to obtain their credit score in addition to the report, they can purchase it for a small charge.
Report Inaccuracies or Incomplete Information
After careful review, any inaccuracies or incomplete information on a credit report should be reported to the consumer reporting agency (CRA) and the bank, credit card company, or other entity that provided the information to the agency. Copies of documentation supporting the inaccuracy should also be submitted. The agencies are then required to investigate the claim and, if the information is inaccurate, notify other CRAs. Moreover, if the agency doesn't resolve the dispute to the person's satisfaction, the person can send a brief statement that explains their side, which must be included with any report the agency issues.
Accurate Information that Negatively Impacts Credit
If information that negatively impacts credit is accurate, that information can, in most circumstances, only be removed after seven years. Debtors should be wary of anyone who claims that they can repair credit for a fee because many credit repair scams exist.
Raising a Credit Score
Several factors are weighed to calculate credit scores and knowing those factors can help increase a credit score in the future. Those factors include whether a person makes timely payments, the ratio between a persons' credit balances to his or her credit limits, the length of history, the types of credit used, and the amount of credit recently acquired.
Questions for Your Attorney
- How do I receive a credit report and do I have to pay for it?
- What do I do if there's an error on my credit report?
- If I have bad credit, how can I increase my credit score?