Credit faq - 8 commonly asked questions on credit report and score
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How is credit score calculated? |
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What is a good credit score?
Anything which is 700+ according to FICO method of calculation is considered to be a good credit score. Different credit bureaus have different methods of calculation and the score varies according to that. However, Vantage score is a universal score devised by the 3 credit bureaus. The value of this score remains same for each bureau.
What is the role of a credit bureau?
The credit bureau keeps record of the credit history of an individual. A credit bureau prepares an individual's credit report which contains every payment details involving that individual. The credit report also contains personal information of the individual such as, the name, residential address, official address, etc.
There are 3 credit bureaus - Equifax, TransUnion and Experian which prepare the credit report. The credit bureaus receive information from the creditor/lenders, debt collection agencies, courts, etc. After receiving this information, the credit bureau compiles it into a credit report, which then reflects the creditworthiness of an individual. These reports are checked by the lenders at the time of extending credit.
Am I entitled to get a free credit report?
Yes, you are entitled to get a free credit report every 12 months as laid down in Fair Credit Reporting Act (FCRA). You can pull your credit report from the credit bureaus.
How shall I order a free credit report?
You can order a free credit report using 3 means:
- By visiting annualcreditreport.com which is a website established by the three credit bureaus to provide you with a copy of the credit report.
- You can also call at the toll free number : 1-877-322-8228
- You can fill out the Annual Credit Report Request Form and mail it to the following address as well:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
What happens if I find a dispute in my credit report?
If there is any kind of dispute or inaccurate information recorded in your report, you can bring it to the notice of the bureau and request to change that information. This right is given to the debtors by Fair Credit Reporting Act (FCRA).
What is the impact of inquiries on my credit score?
Inquiries affect your credit negatively. The more inquiries listed on your credit report, the more you will lose your credit points. Basically, there are two types of inquires. They are:
- Hard inquiry - When you apply for a loan or credit, the creditor pulls your credit report to find out your creditworthiness. This type of inquiry stays on your report for as long as 3 years and affects your credit score in a negative way. This is known as hard inquiry.
- Soft inquiry - It is an inquiry made by creditors or lenders who are not authorized to pull the credit report. Such inquiries take place when a creditor wishes to extend credit to a person without his/her consent. This is also known as unauthorized inquiry. This type of inquiry does not hurt the credit score much.
Do employers check credit report?
Employers sometimes check credit reports of potential employees to know about the financial situation of the person. A credit report contains all the details about credit, loans, mortgages and any kind of transaction done through credit cards. Through your credit report your employer can also make out whether or not you are a responsible person.
