Debt Free Blog

There are three credit reporting agencies: Equifax, TransUnion and Experian. When you borrow money, your lenders report to one or more of these agencies and those reports help determine your FICO Score.

Your FICO score is a representation of your credit based on past debt. Lenders use your FICO score to help them determine whether to lend you money and what interest rate to charge. The lower your FICO score, typically the higher interest rate you will be charged on a loan or credit card.

You cannot have a FICO score if you do not borrow money. Your FICO score is only a representation of your ability to keep and pay on debt. It does not report on your net worth, income, or ability to pay bills such as rent or utilities.

Since the credit reporting agencies determine your FICO score based off information contained in your credit report, you should check your credit report at least annually to ensure the information is accurate. You are entitled by law to receive one FREE copy of your credit report from each of the three credit reporting agencies per year.

To get a copy of your free credit report online in minutes, visit www.annualcreditreport.com. Beware! They will try to sell you an upgraded report, or credit protection. You do not have to pay a dime for your report, and you can still view it instantly online. You are also not required to participate in any “free trials.” Say no to every “offer” and just get the actual report.

Look over your report in detail and make sure all of the information is accurate and that the accounts being reported are yours. Be sure to look for:

• Duplicated accounts
• Closed accounts that still show as open
• Accounts that are older than 7 years
• Accounts that you did not open or do not recognize

You can dispute any inaccurate information with the credit reporting agency directly (i.e. TransUnion). They then have 30 days to verify the information is accurate and respond, or remove/correct the inaccurate information. You are not required to specify a reason why it is inaccurate. The best way to dispute information is in writing, sent certified with delivery notification.

Derogatory information can stay on your credit report for 7 years. Bankruptcy stays on your report for 10 years.