Credit Reporting

Your credit history is your reputation as a borrower. It tells others how likely you are to repay your loans and debts and whether you can pay them on time. Most of the information in your credit history comes from credit reports. Most people know that a good credit history will help them get things like a credit card, a car or house loan, or lower car insurance rates. But your credit history can also be reviewed:

• by employers to make hiring decisions for certain jobs

• by landlords to decide whether to lease an apartment to you

• by colleges and universities for student loans

• by debt collectors to see if they can sue you for a debt

• in legal proceedings (such as divorce and bankruptcy) for information about a person’s assets and liabilities

• by identity thieves who want to use your name and credit (identity theft)

• for purposes of child support enforcement

• by licensing authorities to determine eligibility for a licensed occupation

• for insurance underwriting purposes

The Fair Credit Reporting Act (FCRA) is the law that sets forth the rules about who can legally access your credit history and why.

Under federal law (FCRA), if you are rejected for credit or a loan, you are entitled to a written notice stating why you were denied.

If the rejection was based on your credit report, you have the right to a free credit report and credit score if you ask for it.

You have the right to dispute mistakes in your credit report. Credit reporting agencies must provide information on how to dispute errors. They must respond to your request to investigate these mistakes.

Your score is a three-digit number taken from data in your credit report, such as your payment history and amount of debt owed. Your credit score is a tool used by lenders to evaluate the risk of extending credit to you, what your credit limit will be, and the interest rate you will pay. A higher credit score means better credit. The leading credit scoring agency is FICO. FICO scores range from 300 to 850; the national average is 691. A newer scoring agency is Vantage. Vantage scores range from 501 to 990; the national average is 749. You can get your Vantage score for free at sites like Credit Karma, but you usually have to pay to get your FICO score.

It is a good idea to review your credit history often. You can get a free credit report (but not a credit score) from each of the three reporting agencies every 12 months. Go to www.AnnualCreditReport.com or call 877-322-8228. You must provide some personal information, but no purchase is required.