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Digital News Report – Americans are spending more money than they should because of mistakes on their credit report. Whether or not you are seeking a loan you may want to monitor your credit on an annual basis.
The Fair Credit Reporting Act and Fair Debt Collection Practices Act (FDCPA) were designed to give consumers more power over their personal credit. Credit reporting agencies are authorized to sell credit histories upon request. They are also available to other entities with a “permissible purpose” defined by the Fair Credit Reporting Act.
Experian, Equifax, and TransUnion created a website to help consumers get their free annual credit report for free. There are numerous other companies that will get you a free report as long as you sign up for their monitoring service.
The website, www.annualcreditreport.com, was set up to comply with a federal law that requires the agencies to provide a free report. During this process users may see other “optional” services to help them keep track of their score and history.
A credit score or credit rating is different than a credit report. A credit score is a calculation made from the credit report (i.e. credit history). The calculation may vary according to country. In the United States it is calculated using five criteria:
35% – Payment History
30% – Debt to Credit Limit Ratio
15% – Length of Credit History
10% – Types of Credit Accounts
10% – Inquiries (hard)
Even inquiries can play a role. If one lender inquires on your credit score and you are denied credit this could affect your score. This is one reason why it is important to make sure the information is accurate.
By: Tina Brown
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