The information in a credit report is used to help calculate a credit score. A high credit score can mean better credit options, such as lower interest rates and higher credit limits. Part of maintaining a credit score is monitoring it annually.
Who Calculates Credit Score
Credit scores are often referred to as FICO scores. The majority of scores given to consumers by credit bureaus are produced from software developed by Fair Isaac and Company. Lenders obtain credit score information from the major credit bureaus: Experian, Equifax and TransUnion. Scores may be different depending on the credit bureau and the information contained in the credit report from the bureau.
Information in Credit Report
The Fair Credit Reporting Act allows consumers a free copy of their credit report annually from the three major bureaus. The credit score is not included. The information in the credit report can be used as a guideline for determining a credit score. Payment history, credit utilization, type of credit and credit inquiries all affect a credit score. Consumers can obtain their free credit report by visiting Annual Credit Report (see Resources for link).
Credit Scores
Some companies advertise free credit scores. Usually a free score is provided with the purchase of a product or subscription to a service. The Federal Trade Commission has issued warnings to warn consumers of the misleading marketing. Credit bureaus do not provide FICO scores for free. Consumers who want their credit score should purchase the score through a reputable company such as a major credit bureau.
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