Frequently Asked Questions About Credit Reports and Credit Scores
Q: What if I'm turned down for credit?
A: If you have been turned down for credit, the Equal Credit Opportunity Act (ECOA) gives you the right to obtain the reasons why within 30 days. You are also entitled to a free copy of your credit bureau report within 60 days, which you can request from the credit reporting agencies.
Q: Does it hurt my credit score if I check my own credit score?
A: No, it does not hurt your credit score to check your own credit or to use a credit monitoring service. You can check your credit report as often as you like an it will not show up as an "inquiry" or negatively affect your credit in any way.
Q: Why are there three credit bureaus?
A: There are actually thousands of credit bureaus in the United States, it just so happens that three have emerged as the most prominent and are most often used by banks and other credit-granting institutions: Experian, Equifax, and TransUnion. Everyone actually has three different credit reports, and a different FICO score that corresponds to each of the major credit bureaus. Because these three credit bureaus are the most often used, they are the ones to be aware of. Also, due to differences in the three credit reports, you should be sure to obtain a copy of each of the three credit reports to be sure there are no errors and to get a full picture of your credit history. More about credit bureaus
Q: What is a FICO Score?
A: FICO stands for Fair Isaac Corporation after the company who developed that particular credit scoring system. FICO scores are the credit scores most often used by lending institutions in the United States to determine credit worthiness. FICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories: payment history, amounts owed, length of credit history, new credit, and types of credit used. Learn more about credit scores
Q:What's considered a good credit score?
A: The credit reporting scale runs from 300 to 850. The majority of people have credit scores between 600 and 800. Typically, a score of 720 or higher will get you the most favorable interest rates on a mortgage loan, according to data from Fair Isaac, but scores over 650 are generally considered very good and scores between 620 and 650 will usually allow you to qualify for loans. People with credit scores below 620 can still often qualify for a loan, but are often considered "sub-prime" and will be charged a higher interest rate if a loan is granted. Each lender will have certain criteria they are looking for to give credit, so what is considered a "good score" will vary from one lender to anohte. Also, remember that you will probably have a slightly different credit score with each of the three credit bureaus.
Q:What's the difference between a credit report and a credit score?
A: Although the terms are often interchanged and sometimes confused as being the same, there is a significant difference between a credit report and a credit score.
A credit report is a detailed overview of your borrowing history. Most lenders don't take the time to look at all the details of your credit report. They just want your overall score so they know what kind of credit risk you pose. You will want to carefully review your own credit report and make sure it doesn't contain any errors because that report is what is used to calculate your credit scores. Credit reports are also called "credit file disclosure" by the credit bureaus. This is the technical term they use to distinguish between consumer credit reports and the "credit reports" they provide to their business customers (banks and other lending institutions). A credit report provides you with all of the information in your credit file maintained by a consumer reporting company that could be provided by the consumer reporting company in a consumer report about you to a third party, such as a lender. A credit report also includes a record of everyone who has received a consumer report about you from the credit bureau within a certain period of time ("inquiries").
A credit score is number between 300 and 850 that provides a snapshot of your credit use and borrowing history. This number is used by lenders to determine your credit worthiness. In most cases, the lender bases their decision almost entirely on your credit score. Most use the FICO score (calculated by Fair Isaac).
Q: How can I get credit card companies to quit sending offers?
A: Creditors often purchase lists of consumers who meet a certain credit score criteria who they can market "pre-approved" offers to. Although so-called "soft inquiries" for pre-approved credit cards and loans do not adversely affect your credit rating, you may choose to opt out of receiving such offers. The national credit bureaus offer a toll-free number that enables consumers to opt-out of all pre-approved credit offers with just one phone call. You can choose to opt out for five years or permanently. Call 1-888-5-OPTOUT (1-888-567-8688). Or online at www.optoutprescreen.com.
Q: What is a credit file discloure?
A: Credit file disclosure is simply the term that credit bureaus use for credit report. On this site we use the term credit report most of the time because that's the more generally used and accepted term to discribe the credit file disclosure.
Q: Why are there mistakes on my credit report?
A: Incorrect or outdated information is very common on credit reports. There are several reasons these mistakes appear including the following examples:
- The person applied for credit under different variations of the same names (Steven Smith, Steve Smith, etc.).
- Someone made a clerical error or typo in entering name or address information from a hand-written application.
- The Social Security number was typed in wrong, or the number was misread by the lender.
- Loan or credit card payments were mistakenly applied to the wrong account.
Q: How do I dispute inaccuracies on my credit report?
A: Under the FCRA, both the CRA and the organization that provided the information to the CRA, such as a bank or credit card company, have responsibilities for correcting inaccurate or incomplete information in your report. To protect all your rights under the law, contact both the CRA and the information provider. Learn how to dispute mistakes on your credit report
Q: How often should I check my credit report?
A: You should check it at least three or four times per year. Checking it once a year is not enough anymore because the information on your credit report changes so often. By checking it often, you will be able to clear up any inaccuracies that appear. Request your credit report