Credit Score Q & A
By: Financial Hotline
Fall 2024 (Vol. 42, No. 3)
Q: What is the highest consumer credit score?
A: The most commonly used system is FICO which draws information from the three main reporting agencies: Experian, Equifax, and Transunion. FICO scores range from a low of 300 to a high score of 850. If your score falls under 580, your credit is considered ‘poor’, 580 to 669 is Fair and 670-739 is Good. The average score is 717 and a score of 740 or higher is considered very good or exceptional.
Q: Am I entitled to a free credit score each year?
A: No. You can request a free weekly credit report from Experian, Equifax and Transunion, plus get a yearly credit report free at annualcreditreport.com. These reports will give you a lot of useful information, but it does not provide your credit score. Here are four main ways to get your credit score:
- Check your credit or loan statements. Many credit card companies and lenders will list your credit score on your statement each month.
- Contact a credit or housing counselor.
- Use a credit score service.
- Buy your score from one of the three major credit reporting agencies: Equifax, Experian, or TransUnion.
Q: What is my score based on?
A: Even though it’s great to be debt free, having zero financial obligations doesn’t increase your credit score. Creditors want to see that you have credit and use it responsibly. Your score will look at your payment history, outstanding balances, length of credit history, applications for new credit accounts and different types of credit accounts (mortgages, car loans, credit cards, etc.)
Q: When I receive my report, what are some errors I should look for?
A: First, make sure all the entries are companies and transactions you recognize. Check for:
- Identity errors such as your name, phone number, address and employment
- Accounts belonging to another person with the same or a similar name as yours
- Identity theft (accounts that aren’t yours)
- Incorrect reporting of account status
- Closed accounts reported as open
- Accounts listing you as owner when you are only authorized user
- Incorrect date of last payment, date opened, or date of first delinquency
- Same debt listed more than once, possibly with different names
- Current balance errors
- Credit limit errors
Q: How do I dispute an error on my credit report?
A: Fixing an error generally means contacting both the credit reporting company and the company that provided the information. (If you suspect identity theft, visit IdentityTheft.gov for the next steps to take.) You can dispute errors online or contact the reporting agenges by mail. If you choose to mail a dispute letter, you will need to include:
- Contact information for you, including your complete name, address, and telephone number
- Credit report confirmation number where applicable
- List each error you want corrected, including the creditor name and account number
- Clear explanation of why you are disputing each entry
- Request that the information be removed or corrected
- A copy of the portion of your credit report that contains the disputed items, with the disputed items circled or highlighted
- Copies (not originals) of documents that support your position
Send your dispute letter by certified mail and ask for a return receipt, so that you have a record that your letter was received.
Here is the contact info for the three main nationwide credit reporting companies:
EQUIFAX Online: www.equifax.com/personal/credit-report-services/credit-dispute/
Mail: Download the dispute form and mail the dispute form with your letter to:
Equifax Information Services LLC
P.O. Box 740241
Atlanta, GA 30374
Phone: Call the phone number shown on your credit report or call (866) 349-5191
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EXPERIAN Online: www.experian.com/disputes/main.html
Mail: Use the address provided on your credit report or mail your letter to:
Experian
P.O. Box 4500
Allen, TX 75013
Phone: Call the phone number shown on your credit report or call (888) 397-3742
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TRANSUNION Online: dispute.transunion.com
Mail: Download the dispute form and mail the dispute form with your letter to:
TransUnion Consumer Solutions
P.O. Box 2000
Chester, PA 19016-2000
Phone: (800) 916-8800, Monday – Friday 8 a.m. 11 p.m.
ET, Saturday and Sunday 8 a.m. – 5 p.m. ET.
Next, send a copy to the company that reported the incorrect information.
Q: What happens once my dispute is received?
A: The credit reporting company you sent the dispute letter to must investigate your dispute, forward copies of relevant documents to the company that provided the information about you and report the results back to you. If the agency determines your dispute is valid, your report will be updated. If the agency determines your dispute is without merit, you will receive a notice saying they have decided this is a frivolous dispute. The notice must be sent within 5 business days of their decision. If the creditor maintains the information about you is accurate and should not be updated or removed, you can contact the agencies again and request a statement of dispute be included in your file. If you cannot resolve a problem with your credit report, you can also submit a complaint with the Consumer Finance Protection Bureau at www.consumerfinance.gov
Q: Can a credit repair company fix my credit faster?
A: A credit repair company cannot do anything that you cannot do yourself. The Credit Repair Organizations Act (CROA) was passed in 1997 in response to complaints about magic fix credit repair companies. The Act includes these protections:
- Prohibits organizations from misrepresenting their services
- Requires an organization to provide a written contract with the consumer
- Allows the consumer three days to cancel the contract
- Prevents an organization from charging for services until they have been rendered
If you have a complaint about a credit repair agency, contact the Federal Trade Commission (FTC) for enforcement of the CROA. You can also sue credit repair organizations directly if they defrauded you. A credit repair organization violates the CROA when it fails to offer a written contract or takes payment before helping a consumer. That consumer can then file a lawsuit to seek a return of money. A court may also order the organization to pay attorney fees, punitive damages, and the consumer’s losses.
Q: Where can I find a reputable credit counseling agency?
A: Credit counseling organizations are usually non-profit organizations, and their counselors are certified and trained in the areas of consumer credit, money, debt management, and budgeting. Counselors discuss your financial situation with you and help you develop a personalized plan to solve your money problems.
Most credit counselors offer services through in-person meetings at local offices, online, or on the telephone. To get started, the Consumer Financial Protection Bureau recommends you try the Financial Counseling Association of America (FCAA.org) or the National Foundation for Credit Counseling (www.NFCC.org). You can also view of a list of approved credit counselors through the U.S. Department of Justice.
Once you’ve developed a list of potential credit counseling organizations, you can check with your state attorney general and state consumer protection agency to make sure they’re reputable. A reputable credit counseling organization should be willing to send you free information about its services without requiring you to provide details about your situation. If a service doesn’t do that, consider this a red flag and go elsewhere for help.