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Credit Reporting Agencies |
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Credit Reporting AgenciesCredit Reporting Agencies are companies that keep track of your credit history from your financial transactions like bill payments, loan payments, your debt etc. They apply a set of rules and algorithm to your credit report data and calculate your credit score, called a FICO score. Though there are many credit reporting agencies, three are main called the 'Big Three'. They are Equifax, Experian & Trans Union. Credit report from all three Credit Reporting Agencies can contain different information and hence all three can have three different FICO scores. You can get FICO scores from these agencies for a nominal fee. But you are entitled to get one free credit report per year from each agency on request. You can make request online, by phone or by mail. Looking at your credit report, you can get a valuable information on how your credit history is being recorded and rated. If there are errors, you can dispute erroneous credit report entries with Credit Reporting Agencies. FICO score calculation by Credit Reporting Agencies
A FICO score is a way of measuring your credit worthiness. Lenders,
Insurance companies, Landlords etc check your FICO score from Credit
Reporting Agencies to decide whether you will be able to pay back loan
or bills. Higher the FICO score, better is your credit rating.
Therefore higher the FICO score, lesser the chances of getting rejected
for a car loan, home loan or a credit card. Also higher FICO score
means you are likely to get better deals (lower interest rates) for new
loans.Therefore, it is important for you to check your credit report
from these agencies once in a year to make sure that the information
being recorded is correct, to avoid identity theft and to learn about
your FICO score so that if needed, you can change your financial habits
to improve your FICO score. If there is any error in your report, you
can take steps to resolve them. Making all your payments on time is one
of the keys to improve your FICO score. Significance of Bankruptcy & Foreclosure to Credit Reporting AgenciesCredit Reporting Agencies also capture bankruptcy and foreclosure events in your life. These events can have big negative impact on your credit report & hence FICO score. Normally, credit report has credit history of upto seven years and major events like bankruptcy and foreclosure upto ten years. Therefore bankruptcy and foreclosure can affect your score upto ten years. Also credit scores like FICO score, give more weightage to recent events than older events. Therefore any recent negative entry in your credit report is likely to have bigger negative impact on your FICO score than another similar but older negative entry in your credit report. Addresses of 'Big 3' Credit Reporting AgenciesIf you do need address of the credit reporting agencies, it is provided below. You can order a free credit report: On the Internet: www.annualcreditreport.com |
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