Your Free Credit Score

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The credit score is an indication of a person's financial creditworthiness.

It is used to verify whether the person qualifies for a loan, or other credit, based on whether he has repaid his last loan satisfactorily. A credit score is used by banks and other lending companies for estimating how risky the borrower is. It helps them to know how large a loan can be given and at what rate of interest. In other words, a credit report is a reflection of the past credit history of an individual.

In the US, the credit score is based on the FICO (Fair Isaac Corporation) score that is calculated using mathematical and statistical techniques. There are also other versions of calculating credit scores such as the kind that Beacon and Empirica use. A FICO score is based on various factors including: punctuality of payment in the past, capacity used (ratio of current revolving debt to total available revolving credit), length of credit history, types of credits used and recent credits obtained. FICO scores range from 300-850, wherein a score below 600 is considered "bad", and a score above 720 is considered "good".

Every person has free access to credit scores from three credit bureaus: Experian (Experian/Fair Isaac Risk Model), Equifax (BEACON(r)) and TransUnion (EMPIRICA(r)). Apart from these, lenders can have their own credit scores from other credit bureaus or their internal systems. Free credit scores and reports can be obtained from these three bureaus, one from each, once a year, under the Fair Credit Reporting Act (FCRA). All three reports can be ordered at the same time.

The reports can be obtained by visiting the website: www.annualcreditreport.com or by mailing an Annual Credit Report request form to the Annual Credit Report Request Service. Certain information has to be submitted for accessing the free reports: name, address, social security number, and date of birth. A free report can also be obtained more than once within the same year in certain situations, for example, if a person is on welfare, or if the report is inaccurate because of fraud, or if the person is unemployed and is looking for a job. If a company takes adverse action against the applicant such as denying an application for credit, insurance, or employment, one can request a report within 60 days.

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