Credit:
Your credit report can determine your financial
future.
The next time you
apply for a loan, a mortgage or credit card, approval
will rest in part on your credit score. So it's important
to know your score, not only to check how you're doing,
but also to correct errors on your credit report and
monitor it for identity theft.
By passing the
Fair Credit Reporting Act in 1970 and making subsequent
amendments in 1996, Congress has made it easier to
stay on top of your credit rating. Enforced by the
federal Trade Commission and various state agencies,
the Act gives consumers the right to review their
own credit reports and to challenge errors. If proof
is available, credit-reporting companies must correct
mistakes. But you need to take the initiative to provide
them with proof.
What
affects your score.
Your score represents
your credit profile in comparison with thousands of
others individual credit records. Many factors go
into the score; among them are income, assets, length
of employment, Length of residence in one place, education
level and past credit record. How you stack up in
these categories tells lenders how much credit you
can safely handle.
Each credit
bureau calculates scores in a slightly different way,
but they all rely on the same information. Fair Isaac
Corporation (known as FICO), a California-based firm
that devised the basic scoring system, reports that
scores are heavily determined by five pieces of information;
payment history, the amount you owe, length of credit
history, new credit, and types of credit.
The FICO scoring
model--which is the one most major credit bureaus
use as a basis for their scoring system--ranges from
300 to 850. The higher your score, in general, the
better your credit rating.
Experts advise consumers
to check credit reports at least once a year. Get
a full report, including the score, from all three
bureaus. It's worth having all three because their
sources of credit information, while similar, are
not identical. You can request a report by phone or
online.
Raise
your credit score:
- Pay
all your bills on time.
- Keep
balances low on credit cards and other revolving
credit products.
-
Open credit accounts infrequently.
- When
closing an account, send a letter to the issuing
company asking the record to reflect that the card
was "closed by the consumer".
| Whom
to contact: |
| Equifax |
1-800-685-1111 |
equifax.com |
| Experian |
1-888-Experian |
experian.com |
| TransUnion |
1-800-916-8800 |
transunion.com |
|
|
