Frequently Asked Questions

Who calculates my credit score? Credit scoring is calculated by the three main credit bureaus (CRA) using the formulae supplied by Fair Isaac Corporation. Apart from these bureaus most banks, mortgage lenders and other credit grantors compute your score as well to determine the amount of risk involved in lending money to you. They use their own modules to calculate your score since they maintain a distinct set of criteria while weighing your creditworthiness.

What is the role of a credit bureau?

Credit bureaus act as clearing house for your past credit events. Credit grantors from all over the country provide information to the bureaus regarding the payment of bills of their customers and in turn these credit grantors can obtain credit reports of their applicants. These information is then compiled by the three major bureaus along with public record information obtained from courthouses into a file on each customer. The three major credit bureaus in the US are Equifax, Experian and TransUnion though there exists more than 1000 credit bureaus in the US which are either in contract or owned by the three major bureaus.

What factors determine my credit score?

There are hundreds of factors that are taken into consideration while calculating your score many of which still remains a trade secret. Some of the commonly known factors that are taken into account are Payment history, Debt to available credit ratio (B/L ratio), Length of your credit history, New credit and Credit mix. For more information please refer to the article on credit scoring.

Am I entitled to get a free credit report?

Yes. According to the Fair Credit Reporting Act (FCRA) you have the right to get your free credit report once in a year from all the three credit bureaus Equifax, Experian and TransUnion.

How shall I order a free credit report?

To avail your free credit report from all the three major bureaus you need not contact them individually. Rather you need to do any of the following:

• Visit annualcreditreport.com or
• Call 1-877-322-8228 or
• Complete the annual credit report request form and mail the same to:
  
  
  Annual Credit Report Request Service
  

  P.O. Box 105281
  

  Atlanta, GA 30348-5281

What happens if I find a dispute in my credit report?

There may be instances where you may find unwanted or erroneous information in your credit report. In such cases you need to contact the bureau who generated your report and ask them to remove such information.

What is the impact of inquiries on my credit score?

Inquiries by potential lender or a credit grantor (hard inquiry) for the sake of credit approval cause a drop in your credit score. Depending on the type, these hard inquiries get displayed in your credit profile for as long as 3 years or more. But when you check your credit profile online it is not regarded as a hard inquiry and hence not recorded.

Do employers check credit report?

Employers do check credit report and use it as a standard while hiring or dismissal of a employee.

What is a good credit score?

The definition of a good credit score varies from one business to the other. For example if you have a score ranging from 650 and above, according to mortgage lending guidelines it indicates that you have a good credit history. While according to FICO the median credit score in the U.S. is 723.