Credit Scores and Credit Reports

Your credit score affects whether you can get a loan or credit card, as well as what interest rate and other terms you’ll get. It can also affect whether you can rent a home, get a job, or get insurance. Your credit score is a number that is based on information from your credit report. Your credit report, is a record of whether you pay your bills on time, what debt you have, where you’ve lived, whether you’ve been sued or arrested, and other information. Creditors report your payment and debt information to credit reporting companies, which then put together credit reports that other creditors can look at when deciding whether to give you credit. There are three major credit reporting companies in the United States: Equifax, Experian, and TransUnion.

Because your credit score is based on your credit reports, it is important to check your credit reports regularly, tell the credit reporting companies if any information is wrong, and fix your credit if necessary. Read on to find out how to:

Check Your Credit Report

Because your credit score is so important in getting loans, credit, and housing, it’s important to check your credit reports regularly to make sure they are correct and complete. Checking your credit reports will also alert you to identity fraud because you’ll see if someone has opened accounts in your name or if late payments have been reported for purchases you didn’t know about.

You can get one free copy of your credit report every 12 months from each of the three major credit reporting companies (Equifax, Experian, and TransUnion). All three credit reporting companies collect credit information, but different things may show up on the different credit reports. You can monitor your credit for free by getting free copies of your credit report. There are two common ways to do this:

  1. You can get one credit report from one company, then wait four months and get a report from another company, then wait four months and get a report from the third company. Then, start over again. This way, you can find out more quickly if something is wrong; or
  2. You can get credit reports from all three companies at the same time, once a year. You can then check the reports against each other to make sure nothing is wrong.

In addition, you can get a free copy of your credit report:

  • If a company denies your application for credit, insurance, or employment and you request the report within 60 days;
  • Once a year, if you are unemployed and plan to look for a job within 60 days;
  • Once a year, if you are on public assistance; or
  • Once a year, if your credit report is incorrect because you’ve been a victim of identity theft or other fraud.

To order a free credit report, go to Annual Credit Report or call 1-877-322-8228. You can also fill out the Annual Credit Report Request Form and mail it to:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

Annual Credit Report is the only authorized source for free credit reports. Other companies and websites may offer “free” credit reports or credit scores, but often they charge hidden fees, try to sell you something, or collect your personal information to sell. While Annual Credit Report requires you to give certain personal information to request your free credit report, it will not call or email you to ask for personal information. If you get such a call or email, it is probably a scam.

For more information on checking your credit report, visit the Federal Trade Commission’s Free Credit Reports and the CFPB’s Getting A Credit Report.

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Dispute Errors on Your Credit Report

If your credit report has wrong information, you can dispute the error so that it is fixed. Here is how to dispute an error:

First, write a letter to the credit reporting companies (Equifax, Experian, and TransUnion) that have the wrong information to ask them to fix the information. Include all of the following:

  • Your name and address;
  • The specific information in your credit report that is wrong;
  • Why that information is wrong;
  • Copies (not originals) of any receipts, emails, or other documents that support why the information is wrong; and
  • Ask that the information be deleted or corrected.

You may use the Federal Trade Commission’s sample dispute letter to credit reporting companies and attach a copy of your credit report with the wrong items circled. Send the letter by certified mail or priority with tracking, and keep a copy of the letter and receipt.

Second, write a letter to the information provider that gave the wrong information to the credit reporting companies. This might be a store that incorrectly billed you for something, a landlord that incorrectly said you were late on your rent, or some other person or company. If the information provider’s address is not listed on your credit report, contact the information provider for the address for submitting disputes or notices of error. Include the same information as in your letter to the credit reporting agencies. You may use the Federal Trade Commission’s sample dispute letter to information providers and attach a copy of your credit report with the incorrect items circled. Send the letter by certified mail or priority with tracking, and keep copies for yourself.

Credit reporting companies must investigate all disputes, usually within 30 days, unless they consider your dispute frivolous. They will forward your dispute to the information provider, who will then investigate your dispute and report back to the credit reporting company. If the information provider determines that its information was wrong, it must correct that information with all three of the major credit reporting companies.

Credit reporting companies must tell you their investigation results in writing. If they delete or correct any information on your credit report, they must give you a free copy of your updated credit report. You may ask them to send a notice of the correction to anyone who got your credit report in the last six months.

If you cannot get the disputed information corrected or deleted, you may ask the credit reporting companies to add a statement noting your dispute in your file and in future credit reports.

For more information on disputing errors in your credit report, visit the Federal Trade Commission’s Disputing Errors on Credit Reports and the CFPB's Disputing Errors On A Credit Report.

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Fix Your Credit and Improve Your Credit Score

Here are some tips on how to fix your credit and improve your credit score:

  • Pay your bills on time. Paying off your credit card balance and paying your other bills on time will really help your credit score.
  • Have some — but not too many — credit accounts. Creditors want to know your track record of paying off bills and debts. To show a good track record, open some credit accounts, pay on time, and try not to have a lot of debt. But beware: having too much credit—for example, having many credit cards—may hurt your credit score because creditors may look at your total debt potential.
  • Don’t apply for too much new credit in a short period of time. Be thoughtful about what credit cards or financing to apply for. Applying for many new credit cards or other credit accounts in a short period of time counts as several “inquiries” on your credit report and can hurt your credit score. Note that if you have lots of inquiries for a mortgage or car loan in a short period of time, many creditors will consider them as a single inquiry.
  • Don’t max out your credit limits. Your credit score will likely be hurt if the amount of debt you owe is close to your credit limit. According to one rule of thumb, creditors may be hesitant to lend you money if your debts are more than 75% of your credit limit. So, make sure you know how much you owe on your credit cards and other debt. If you can, pay off your full credit card balance every month. If you can’t, try to keep a low balance and pay down as much as you can.
  • Work out repayment plans. If you are having trouble paying your bills or repaying your loans, contact your creditors about repayment plans. If you arrange a repayment with a creditor, make sure—before you make any payments—that you have a written agreement from the creditor that as long as you keep up your end of the plan, the creditor will report your account as current, paid off, and not late. It is better to work out a repayment plan sooner rather than later because creditors generally won’t work with you after they send your account to a debt collection service, and that will likely hurt your credit score more.

If you need help fixing your credit, contact a non-profit credit counseling service that can help you for little or no cost. You can also check with your employer, credit union, or housing authority to see what no-cost credit counseling programs may be available.

It takes time to build up or fix your credit. Unfortunately, there are a lot of fraudsters preying on consumers who want to fix their credit. Avoid any credit counselor or company that promises quick-fix credit repairs, promises to hide your bad credit history, requires upfront payment, or tells you to dispute accurate credit report information or to give false information to creditors.

Here are some resources to help you find a reputable credit counselor:

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If you believe a consumer reporting company, creditor, or credit counselor has violated the law, you may file a complaint with the Attorney General’s Office. The Office uses complaints to learn about misconduct. However, we cannot give legal advice or provide legal assistance to individuals. For information on how to find an attorney, see Attorneys/Lawyers.

You may also file a complaint with the Federal Trade Commission online or by calling 1-877-FTC-HELP.

For more information about credit scores and credit reports, visit the Federal Trade Commission’s Credit Scores and the CFPB’s Credit Reports And Scores.