Finding Out Your FICO Score

A growing number of creditors, as well as insurance companies, employers, and
landlords, use something called a FICO score together with (or even instead of)
your credit history to make decisions about you. Your FICO score is a numeric
representation of your creditworthiness and is derived from your credit history
information. Like your credit history, the score is a snapshot of how you’ve managed
credit in the past. As such, your FICO score is generally considered an indicator
of how well you are likely to manage credit in the future.

Actually, a variety of different credit scores exist. Equifax, Experian, and
TransUnion have developed their own credit scores. (Each credit-reporting
agency sells its credit score on its Web site.) But the FICO score has become
the industry standard. You can order your FICO score by going to www.
myfico.com.

Your FICO score can range from 300 to 850. The higher, the better: A score
of at least 720 is considered to be very good. If your score is well below 720,
you may still qualify for credit from some creditors, but you’ll be charged a
higher interest rate and you may not qualify for as much credit as you would
like. Likewise, insurance companies may be willing to sell you insurance, but
you’ll probably pay extra for the coverage and you may not be able to purchase
as much insurance as you would like. When you have a low FICO score,
some landlords will not rent to you, and you may not qualify for certain kinds
of jobs, especially those that involve handling money.

Knowing why your reports matter

The credit report you get is the same one that your current creditors and
potential future creditors use to make decisions about you. The more negative
information is in your credit histories (such as past-due accounts,
accounts in collection, accounts that your creditors have charged off as
uncollectible, tax liens, and so on), the worse your finances are.

Your existing creditors may use the information to decide whether to raise
the interest rates you are paying, lower your credit limits, or even cancel your
credit. And whenever you apply for new credit, the creditors review your
credit record information to decide whether to approve your application, how
much credit to give to you, the interest rate you must pay, and so on.

Many insurance companies, landlords, and employers also review your credit
record information. If they find a lot of negative information, insurance companies
may not agree to insure you or may charge you higher-than-normal
premiums; landlords may refuse to rent to you; and employers may not want
to hire you or to give you the promotion you applied for.

The federal Fair Credit Reporting Act says that most negative information
remains in your credit reports for 7½ years and that a Chapter 7 liquidation
bankruptcy and a Chapter 13 reorganization of debt linger there for ten
years. However, the three credit reporting agencies have a policy of reporting
completed Chapter 13s for only seven years. A tax lien sticks around until
you pay it.

Checking Out Your Credit Reports

Three national credit-reporting companies operate in the United States:
Equifax, Experian, and TransUnion. Reviewing the information in your
credit report from each company is an excellent way to see your true financial
picture.

Getting copies of your credit reports
For a comprehensive survey of your creditworthiness, order a copy of your
credit report from each of the national credit-reporting agencies, not just
from one. Each report may contain slightly different information about you,
partly because not all creditors report all consumer account payment information
to all three agencies.

You are entitled to one free copy of each of your credit reports every year. To
order yours, go to www.annualcreditreport.com or call 877-FACT-ACT.
If you’ve already obtained free copies of your credit reports during the past
12 months, you must pay a fee to order additional copies. In most states, the
cost is $10 per report (and some states also charge a sales tax), although the
cost is less in some states. You can call your state attorney general’s office to
find out.

Also, you are always entitled to a free credit report if

You are unemployed and intend to apply for a job within 60 days.
You are receiving public welfare assistance.
You believe that you have been the victim of identity theft.
You have been denied credit, employment, insurance, or a place to rent
within the past 60 days because of information in your credit report.
To order additional copies of your credit reports after you’ve obtained your
free annual ones, you must contact each of the three credit-reporting agencies
individually. You can order the copies by mail, by phone, or online.
Equifax: www.equifax.com; 800-685-1111; Disclosure Department, P.O.
Box 740241, Atlanta, GA 30374
Experian: www.experian.com; 888-397-3742; P.O. Box 2104, Allen, TX 75013
TransUnion: www.transunion.com; 800-888-4213; P.O. Box 1000,
Chester, PA 19022
If you order additional copies by mail, put your request in a letter that
includes the following information, and be sure to sign it:
Your full name (including Jr., Sr., III, and so on)
Your Social Security number
Your date of birth
Your current address and previous addresses for the past five years
Your phone number, including area code
The name of your current employer