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IS THERE SUCH A THING AS A FREE CREDIT REPORT?
May 20, 2008 - Your credit report is an important thing. It’s kind of like a passport to living in the
21st century. With a good score (based on your credit history), it’s much easier and much less
expensive to get loans, be insured, and even get a job. And since it’s a detailed listing of what
kind of a borrower you are, it’s also important to look at your credit report occasionally to
make sure it doesn't contain mistakes.
The three major credit reporting companies -- Equifax, Experian and TransUnion -- make their
money by analyzing and reporting on how you live your financial life. These companies use
mathematical models to calculate what kind of risk you pose to someone who is considering
lending you money. The formulas the credit reporting bureaus use are based on the original
credit scoring model created in the mid-20th century by the Fair Isaac Corporation. Fair Isaac’s
model is the industry standard, which is why your credit score is usually called your FICO (Fair
Isaac COrporation) score.
Your personal data (like your age, where you live, your Social Security number and the like) is
attached to your financial information. This includes the payments you’ve made, the amount of
credit available to you, how much debt you have, the types of loans and credit you have
outstanding, and the age of your credit lines [source: BankRate]. All of this information is
crunched into the scoring formula, and your FICO score -- a number between 300 and 850 -- is
tabulated.
If this sounds like a lot of work, it is. The credit reporting bureaus compiled about 4.5 billion
pieces of data every month in 2003, culminating in more than one billion completed reports
issued that year [source: PBS]. That’s one-sixth of the global population.
Click on the red link above to continue the story.
Source: HowStuffWorks.com
May 20, 2008 - Your credit report is an important thing. It’s kind of like a passport to living in the
21st century. With a good score (based on your credit history), it’s much easier and much less
expensive to get loans, be insured, and even get a job. And since it’s a detailed listing of what
kind of a borrower you are, it’s also important to look at your credit report occasionally to
make sure it doesn't contain mistakes.
The three major credit reporting companies -- Equifax, Experian and TransUnion -- make their
money by analyzing and reporting on how you live your financial life. These companies use
mathematical models to calculate what kind of risk you pose to someone who is considering
lending you money. The formulas the credit reporting bureaus use are based on the original
credit scoring model created in the mid-20th century by the Fair Isaac Corporation. Fair Isaac’s
model is the industry standard, which is why your credit score is usually called your FICO (Fair
Isaac COrporation) score.
Your personal data (like your age, where you live, your Social Security number and the like) is
attached to your financial information. This includes the payments you’ve made, the amount of
credit available to you, how much debt you have, the types of loans and credit you have
outstanding, and the age of your credit lines [source: BankRate]. All of this information is
crunched into the scoring formula, and your FICO score -- a number between 300 and 850 -- is
tabulated.
If this sounds like a lot of work, it is. The credit reporting bureaus compiled about 4.5 billion
pieces of data every month in 2003, culminating in more than one billion completed reports
issued that year [source: PBS]. That’s one-sixth of the global population.
Click on the red link above to continue the story.
Source: HowStuffWorks.com
