There are different methods of calculating credit scores. FICO scores, the most widely used type of credit score, is a credit score developed by FICO, previously known as Fair Isaac Corporation. As of 2018, there are currently 29 different versions of FICO scores in use in the United States. Some of these versions are "industry specific" scores, that is, scores produced for particular market segments, including automotive lending and bankcard (credit card) lending. Industry-specific FICO scores produced for automotive lending are formulated differently than FICO scores produced for bankcard lending. Nearly every consumer will have different FICO scores depending upon which type of FICO score is ordered by a lender; for example, a consumer with several paid-in-full car loans but no reported credit card payment history will generally score better on a FICO automotive-enhanced score than on a FICO bankcard-enhanced score. FICO also produces several "general purpose" scores which are not tailored to any particular industry. Industry-specific FICO scores range from 250 to 900, whereas general purpose scores range from 300 to 850.
In most cases, the easiest way to determine the health of your credit is to look at your credit score, a numerical value that reflects a mathematical analysis of your debt, your payment history, the existence of liens or other judgments, and other statistical data collected by the credit bureaus. In other words, your credit score is the compact, simplified version of your entire credit history, all rolled up into one tidy three-digit number.
Also known as an educational credit report, consumers are urged to take advantage of this offer every twelve months to find instances of fraud or other inaccuracies on their credit file. Monitoring accounts like this can help reduce your risk of falling victim to identity theft and will ensure you have the highest score possible according to your individual credit account.
Industry consolidation has whittled what used to be scores of local and regional credit bureaus down to the three that we know of today: Equifax, TransUnion and Experian. There was a day when you actually had a local credit bureau that would sell your credit file to lenders in your geographic locale. Over the past several decades the “big three” gobbled up these smaller credit bureaus in an effort to become truly “national” in their coverage. What this means is that if you lived in Miami all your life and then moved to Anchorage that your credit report would still follow you despite all of your credit having been issued when you lived in south Florida. The benefit of these national credit bureaus is that you won’t lose any of your solid credit management history simply because you’ve moved to another part of the country. Likewise, moving to another part of the country will not rid you of any negative credit reporting challenges that you may have faced in the past.
Many people mistaken a credit report for a credit score, but they’re not the same thing. Credit scores are calculated based on your credit history. Lenders use credit scores to make a decision about extending credit and interest rates to the borrower. Your credit report is a detailed report based on your credit history based on the information lenders report to credit bureaus.
Get a free copy of your credit report every four months. You can receive a free copy of your credit report from each bureau every 12 months. Since there are three bureaus, you can stagger your requests to receive a report every four months so you have better access to recent information. It’s easy to keep track of which bureau you use and when you need to request another free report – just set up calendar reminders on Google Calendar, MS Outlook, or another calendar system.
Your credit report includes instructions on how to dispute inaccurate information. In most cases, you have to provide your credit bureau with a written statement regarding the information you are disputing. The credit bureau will then open an investigation with the creditor listed on your report. When the investigation is complete, the credit bureau is required to provide you with a written report of the outcome, as well as an updated copy of your credit report. If the dispute is ruled in your favor, the creditor must provide adjusted information to all three credit bureaus. In cases of identity theft, you should also file a police report.
When you open a new line of credit, a few immediate changes are usually made to your credit report. Most instantly, a new hard inquiry will probably be added to your report, and your average age of credit history could drop. Due to these factors, opening a new account is likely to drop your credit score in the short term. However, as you begin to diligently pay off your bills, the additional on-time payments, the higher number of total accounts and your now-growing age of credit history will likely outweigh the initial downsides, and your score can benefit in the long term.
Checking your credit can affect your credit score but only if it is a hard credit inquiry. This type of credit check is typically done by creditors when they want to see your entire profile in order to approve or decline you for credit when you are applying. Keep in mind that this is usually a small decline and temporary until you start paying your loan back. Be sure to check your credit score every month from Credit Sesame to see if you have anything negative on your credit report.
A: Under the FCRA, both the credit reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take full advantage of your rights under this law, contact the credit reporting company and the information provider.