What is Credit?
Credit is more than just a plastic card you use to buy things-it is your financial trustworthiness. Good credit means that your history of payments, employment and salary make you a good candidate for a loan, and creditors-those who lend money or services-will be more willing to work with you. Having good credit usually translates into lower payments and more ease in borrowing money. Bad credit, however, can be a big problem. It usually results from making payments late or borrowing too much money, and it means that you might have trouble getting a car loan, a credit card, a place to live and, sometimes, a job.
Credit Scores
Most creditors use credit scoring to evaluate your credit record. This involves using your credit application and report to get information about you, such as your annual income, outstanding debt, bill-paying history, and the number and types of accounts you have and how long you have had them. Potential lenders use your credit score to help predict whether you are a good risk to repay a loan and make payments on time.
Good credit is important, now and in the future. In most cases, it takes seven years for accurate, negative information to be deleted from a credit report. Bankruptcy information takes even longer to be deleted-10 years.
Credit scores range from 300 to 850 (Higher the score; the less risk). Shopping around for a mortgage will not negatively affect your credit score. Consumer-initiated mortgage inquiries are ignored for 30 days. Outside the 30-day window, mortgage inquiries that occur within a 45-day period are treated as a single inquiry.
Credit Reports
The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting agencies-Equifax, Experian and TransUnion-to provide a free credit report copy, once every 12 months, to anyone who requests. However, they are not required to provide a FICO score at no charge, just a trade line listing. To request a free copy of your credit report, visit www.annualcreditreport.com and choose which reporting agency you would like the report from.
You may also visit each reporting agency individually. The information for each follows:
Equifax 1-800-685-1111 www.equifax.com
Experian 1-888-397-3742 www.experian.com
TransUnion 1-800-888-4213 www.transunion.com
Federal Trade Commission
The Federal Trade Commission (FTC) is the nation's consumer protection champion. The FTC works for the consumer to prevent fraud, deception and unfair business practices in the marketplace.
The FTC provides the information consumers need to spot and avoid fraud and deception. Consumers can contact the FTC for free information on a wide range of issues, including:
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Advertising claims
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Buying, leasing and renting cars
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Credit
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Debt collection
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Employment and job placement
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Identity Theft
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Investment schemes
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Online shopping
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Scholarship scams
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Sweepstakes
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Telemarketing
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Work-at-home schemes...and more
Contact the FTC at 1-877-382-4357 or www.ftc.gov
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