Credit Score Basics

This is going to be a rudimentary post for many people out there, but I recently requested my credit report so I'll blog briefly about it.

Under the (relatively) new law everyone in the U.S. is entitled to one free credit report annually. With identity theft on the rise and the ability of your credit score to ensure you affordable rates on loans, approval on renting, and now increasingly employers are using credit checks to determine how trustworthy new recruits are it is an important stat to know. How exactly the FICO (Fair Isaac Corp) score is a closely guarded secret, but it takes into account the amount of credit you have available, history of payments and any new credit you have applied for. Scores range from 300 to 850.

If you would like to check out what kind of dirt the credit bureaus have on you (there are three of them Equifax, Experian, and TransUnion) you can visit annualcreditreport.com and request all or one of your reports. I would recommend that since you can receive one free report from each bureau per year that you spread them out - request Equifax this week, Experian in four months, TransUnion in eight months. It's more of a hassle but it's better to know if someone opened a credit card in your name four months down the road than a full year. The quicker you find mistakes and errors the easier they are to fix. It is also good practice to request a report about six months before applying for credit or a loan. Creditors pull your report and if there are inaccuracies it can take months to iron everything out.

Should anything be wrong you can file a protest (depending on the company either on their website or by written letter) and convince them to remove or at least investigate a questionable entry. The bureau has 30 days under federal law to respond to your request and if they deny your request and something is legitimately inaccurate and they refuse to change it you can sue them.