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Fair credit reporting act: providing consumers the protection they need

By Brian Anderson
Published: Friday, November 5th, 2010

06The widespread use of credit scores started in the mid-1990s however how it was handled during these times is different from how it is today. Well it was primarily serving the needs of merchants in evaluating their customers thus credit scores were used without the customers’ knowledge. It was a total secret at first and when people started learning about the credit score’s existence it remained mysterious for them.

Now the face of credit score has changed. Consumers are now given the chance for them to view their own credit scores but this is not a free service. With the Fair Credit Reporting Act (FCRA) via Fair and Accurate Credit Transaction (FACT) credit reporting agencies are mandated to make the credit scores transparent to the public. This disclosing of credit scores, as according to these Acts must be set available for a “fair and reasonable fee.”

FICO is the pioneer when it comes to credit scoring and this company has been around for several years thus this is the most commonly used credit score source by lenders. The scores generated by FICO are utilized by lenders in determining who among the customers are worthy of credit. Also the rate given to the customers largely depends on credit scores. There are other companies offering scores like the VantageScore. The system used by the VantageScore considers the range of 500 to 990 while FICO’s system of scoring has a range from 300-850.

You can have access to your credit FICO score for a price. The scores are primarily obtainable for $15.95 through myFICO.com. Another website you can try to buy your credit score is through AnnualCreditReport.com which offers scores for $7.95.

Paying for your credit score will not last long. According to the Federal Reserve and Federal Trade Commission starting January next year lenders will be required to grant consumers a free copy of credit score or a risk-based pricing. This new rule when implemented will open an important opportunity for consumers to be educated with their financial data. If people will not be asked to pay for these three-digit numbers the more they will be encourage to assess their scores firsthand.

There are really aspects of credit score that have changed face however just like how it used to be in the past the exact manner on how these three-digit scores offered by companies like FICO and Vantage Score are calculated remains unknown to the public. What is given to inform the public are some of the credit misbehaviors that can influence one’s credit score and to what extent are they affecting the scores.

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