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What Constitutes Credit Report and How Do You Access It?

By Janet Lacey
Published: Sunday, September 30th, 2012

The Federal Credit Reporting Act, termed as FCRA, stipulates that all the consumers of the United States are eligible to access their free credit reports annually. The government has made provisions for such a free credit report to enable consumers prevent identify thefts, have equitable treatment while borrowing, and obtain information about all the factors that affect their credit scores. Before the enactment of FCRA, consumers were forced to pay for receiving their credit reports, with only a few states declaring that consumers could get their credit reports without any payment. However, the implementation of FCRA has mandated that credit report access is free in the entire country with the limitation that one consumer could obtain a free credit report only once in a year.

There are three major credit reporting agencies in the United States. They are Equifax, Experian, and TransUnion. These three agencies compile reports of all financial transactions of every individual in the United States from various sources like financial institutions, stock market brokers, credit unions, and other organizations dealing in financial transactions. With the help of these reports, these agencies compute credit scores for each individual. This credit score has been created initially by Fair Isaac Corporation in 1958 and hence it has been known as FICO credit score. The highest FICO score that one could obtain is 850. The three agencies have also combined together to form their own credit score computation in 2006, known as VantageScore. The highest VantageScore is 990. Still, the FICO score remains the most popular credit score in the U.S.

Consumers would be able to receive their free credit reports from these three organizations from a special website developed by them. Consumers could also contact via telephone and request their free credit reports. They could also contact these three credit reporting agencies, namely Experian, Equifax, and TransUnion to obtain additional credit reports during the same year. However, they would have to either pay for such additional reports or make a contribution of annual subscription. The credit reporting agencies would demand the full name, address, date of birth, and social security number of the consumer before presenting the credit report.

These three agencies compute the credit score through special software. This special software is capable of computing your credit rating and generating your FICO score or VantageScore. When you approach a financial institution or a lending agency, the lender requests your credit report from one of the three agencies. The lender decides the terms of lending and the interest rate that is applicable to you based only on the credit report. If the lender has any doubt about your credibility, the lender might even obtain reports from all the three agencies to verify whether you are worth trusting. Hence, credit report plays a very crucial role whenever you make any effort to borrow money or obtain credit.

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