Know The Basics - Credit Scores
Why are my credit scores so different?
There can be several reasons why your credit scores may vary between different sources or scoring models. Here are some common factors that can contribute to score differences:
Different Scoring Models:
Credit scores can be calculated using various scoring models, such as FICO Score or Vantage Score. Each model may have its own algorithms and weightings for different credit factors, leading to score variations.
Credit Bureau Data:
Credit scores are based on the information in your credit reports, which are compiled by credit bureaus (Experian, Equifax, TransUnion). Not all lenders report to all three bureaus, so the data in your reports may differ, resulting in score disparities.
Timing of Updates:
Lenders may report updates to credit bureaus at different times, leading to temporary score differences. If a lender reports changes to one bureau but not others, it can affect the scores until all bureaus receive the updated information.
Credit Utilization:
Credit utilization, the ratio of credit card balances to credit limits, can vary depending on when lenders report this information. If balances are reported at different times during the billing cycle, it can impact credit scores.
Scoring Range:
Different scoring models may have different score ranges. While most commonly used models range from 300 to 850, there can be variations, and certain industries may use customized scoring models with different ranges.
Calculation Factors:
Credit scoring models consider various factors, including payment history, credit utilization, length of credit history, types of credit, and new credit applications. Differences in these factors among your credit reports can contribute to score variations.
What's the difference between a Vantage Score and FICO Score?
- Development:
VantageScore was jointly developed by the three major credit bureaus (Experian, Equifax, and TransUnion), while FICO Score was created by the Fair Isaac Corporation. - Scoring Range:
VantageScore ranges from 300 to 850, with higher scores indicating better creditworthiness. FICO Score ranges from 300 to 850 as well, but there are also industry-specific FICO Score versions with different ranges. - Methodology:
VantageScore and FICO Score use different algorithms to calculate credit scores. While both consider similar factors like payment history and credit utilization, the weight assigned to each factor may vary. - Credit File Requirements:
VantageScore requires at least one month of credit history and one account reported within the past two years. FICO Score typically requires at least six months of credit history and one account reported within the past six months. - Market Penetration:
FICO Score is more widely used by lenders, while VantageScore has been gaining popularity in recent years.
It’s important to note that the specific versions of VantageScore and FICO Score used by lenders may differ, so credit scores can vary between the two models.
How can you get A Copy Of My Credit report?
You can get a free copy of your credit report from each of the three major credit reporting agencies once a year:
- Online: Visit AnnualCreditReport.com
- By phone: Call (877) 322-8228
- By mail: Fill out the Annual Credit Report request form and mail it to: Annual Credit Report Request Service, PO Box 105281, Atlanta, GA 30348-5281
According to the Fair Credit Reporting Act (FCRA), you can request a free copy of your credit report from each of the three major credit bureaus once every 12 months.
You could also be eligible for an additional credit report under the Fair Credit Reporting Act during any 12-month period if you meet one of the following requirements:
- You are unemployed and intend to apply for employment within 60 days;
- You receive public welfare assistance;
- You believe your credit report contains inaccurate information due to fraud.
Equifax is P.O. Box 740241, Atlanta, GA 30374-0241.
Experian is P.O. Box 2104, Allen, TX 75013-0949.
TransUnion is P.O. Box 1000, Chester, PA 19022.
How to read a Credit Report?
Reading a credit report can seem overwhelming, but here are some key ste
How can you get A Copy Of My Credit report?
You can get a free copy of your credit report from each of the three major credit reporting agencies once a year:
- Online: Visit com
- By phone: Call (877) 322-8228
- By mail: Fill out the Annual Credit Report request form and mail it to: Annual Credit Report Request Service, PO Box 105281, Atlanta, GA 30348-5281
According to the Fair Credit Reporting Act (FCRA), you can request a free copy of your credit report from each of the three major credit bureaus once every 12 months.
You could also be eligible for an additional credit report under the Fair Credit Reporting Act during any 12-month period if you meet one of the following requirements:
- You are unemployed and intend to apply for employment within 60 days;
- You receive public welfare assistance;
- You believe your credit report contains inaccurate information due to fraud.
- Equifax is P.O. Box 740241, Atlanta, GA 30374-0241.
- Experian is P.O. Box 2104, Allen, TX 75013-0949.
- TransUnion is P.O. Box 1000, Chester, PA 19022.
PS- to help you navigate it effectively:
- Personal Information
Review your personal details, such as name, address, and social security number, to ensure accuracy. - Account Summary
Look for a summary section that provides an overview of your accounts, including the number of open and closed accounts, total debt, and available credit. - Account Details
Examine each account individually. Note the creditor’s name, type of account (credit card, loan, etc.), account number, balance, payment history, and status (open, closed, etc.). Pay attention - Credit Inquiries
Check for a section that lists recent inquiries made by lenders when you applied for credit. Inquiries may be categorized as hard inquiries (initiated by you) or soft inquiries (initiated by companies for promotional purposes). Multiple hard inquiries within a short period can slightly impact your credit score. - Public Records
If applicable, review any public records such as bankruptcies, tax liens, or judgments. These records can significantly impact your creditworthiness. - Dispute Errors
If you spot any inaccuracies, such as accounts you don’t recognize, incorrect balances, or outdated information, take note of them. You have the right to dispute errors with the credit bureau, and they must investigate and correct any verified inaccuracies. - Credit Score
Some credit reports may include your credit score. Understand that different scoring models may yield different scores, so it’s helpful to focus on the overall credit report information rather than just the score.
What are some of the most common errors on a credit report?
Check for identity errors
- Errors made to your identity information (wrong name, phone number, address)
- Accounts belonging to another person with the same or a similar name as yours (mixing two consumers’ information in a single file is called a mixed file)
- Incorrect accounts resulting from identity theft
Check for incorrect reporting of account status
- Closed accounts reported as open
- You are reported as the owner of the account, when you are actually just an authorized user
- Accounts that are incorrectly reported as late or delinquent
- Incorrect date of last payment, date opened, or date of first delinquency
- Same debt listed more than once, possibly with different names
Check for data management errors
- Accounts with an incorrect current balance
- Accounts with an incorrect credit limit
Know Your Rights - Fair Credit Reporting Act (FCRA)
You have a right to know what’s on your credit reports
Under the Fair Credit Reporting Act, you’re entitled to at least one free credit report per year from each of the three major credit bureaus — TransUnion, Experian and Equifax. But starting during the pandemic, the bureaus are offering weekly access. Request your reports by using AnnualCreditReport.com.
- TransUnion: Call 800-916-8800.
- Equifax: Visit the link or call 888-378-4329.
- Experian: Click on the link or call 888-397-3742.
You have a right to privacy
Although your credit can be checked in many situations — when you apply for credit, a job, utilities, student loans, etc. — it typically requires your consent. Your credit report can’t be distributed to a third party unless it’s related to a credit transaction, employment or court order.
You have a right to dispute errors
Four out of five consumers who filed a dispute had their credit reports modified in some way, according to a 2013 FTC report. If your credit report includes incorrect or outdated information, file a dispute to have it removed.
DOWNLOAD THE APP
You have a right to leave the past in the past
Collections are only supposed to stay on your report for seven years — but even if they’ve passed their statute of limitations, debt buyers might still try to collect on the debt. Some debt buyers might re-age the debt, or change the date of delinquency on the account, in order to extend the statute of limitations. This practice violates the Fair Credit Reporting Act.
Maintain Medical Information Privacy
You are protected from having medical information in a consumer report, as creditors are prohibited from obtaining or using medical information when making a credit decision.
Limit Unsolicited Credit Offers
The law allows you to request to have your name and address removed from unsolicited prescreened offer lists for credit and insurance. To opt out of such correspondence, call (888) 5-OPTOUT (888-567-8688).
Protect Your Personal Account Numbers
Businesses are not permitted to publish full credit card numbers on receipts. The law also allows you to protect your Social Security number by having it truncated on your credit report.
Receive Notification of Possible Negative Information
You have the right to be notified if any financial institution submits, or plans to submit, negative information to a credit reporting agency. This information may be included in a billing statement or a notice of default.
Seek Damages
You have the right to sue and seek damages in a state or federal court from anyone, such as a consumer reporting agency or a user of consumer reports, who violates the Fair Credit Reporting Act.
Know When Your Credit Report Is Used Against You
If you are denied credit, insurance, or employment because of your credit report, you can ask for the specific reason for the denial.
Know Your Rights - Fair Debt Collection Practices Act
If You Owe Money
Creditors don’t want to bring in a debt collection agency. But if it looks like you won’t pay, they will. The creditor will sell your debt to a collection agency for less than face value, and the collection agency will then try to collect the full debt from you.
If you owe a debt, act quickly — preferably before it’s sent to a collection agency. Contact your creditor, explain your situation and try to create a payment plan. Usually, creditors will help you catch up.
What Debt Collectors Can’t Do
Debt collectors are regulated by the Texas Debt Collection Act. Among other things, the Act prohibits debt collectors from:
Using abusive collection tactics, including:
- threatening violence or other criminal acts
- using profane or obscene language
- falsely accusing the consumer of fraud or other crimes
- threatening arrest of the consumer, or repossession or other seizure of property without proper court proceedings
- using the telephone to harass debtors by calling anonymously or making repeated or continuous calls
- making collect telephone calls without disclosing the true name of the caller before the charges are accepted
Using fraudulent collection tactics, including:
- using a false name or identification
- misrepresenting the amount of the debt or its judicial status
- sending documents to a debtor that falsely appear to be from a court or other official agency
- failing to identify who holds the debt
- misrepresenting the nature of the services rendered by the collection agency or the collector
- falsely representing that the collector has information or something of value in order to discover information about the consumer
- Trying to collect more than the amount originally agreed upon. (But remember: your debt can grow by the addition of fees — e.g., collection fees, attorney fees, etc.).
Violators of the Texas Debt Collection Act are subject to criminal and civil penalties. If you think you have been harassed or deceived, you can even seek injunctions and damages against debt collectors.
These actions are also violations of the Texas Deceptive Trade Practices/Consumer Protection Act, which gives the Attorney General the authority to take action in the public interest.
This federal law applies only to collectors working for professional debt collection agencies and attorneys hired to collect a debt. It is similar to Texas law, but also prohibits:
- Calls at work if the collector has reason to know the employer does not permit such calls
- Calls before 8:00 a.m. or after 9:00 p.m. unless the collector knows such times are more convenient for the debtor
- “Unfair or unconscionable means to collect or attempt to collect a debt”
- Any conduct to harass, oppress, or abuse
If you are being subjected to harassing, abusive, or fraudulent debt collection tactics by professional debt collectors — and you want to stop further contact with you — notify the collector in writing. Keep a copy of your letter and send the original to the debt collector by certified mail.
If You Dispute a Debt
- If you dispute the legitimacy of something in your debt collector’s file, you must give the collector written notice. Simply calling the collector won’t cease collection activities.
- If possible, send your dispute letter by certified mail (with “return receipt requested”) so you know it was officially received by the collector. The collector then has 30 days to determine whether or not the disputed item is correct.
- If the disputed item is correct…
The debt collector can continue collection activities. - If the disputed item is incorrect…
It must be corrected. The debt collector must notify anyone who has already received a report containing the incorrect item. If, at the end of 30 days, the debt collector has not been able to determine whether the item is correct or not, they must make the change you requested and notify anyone who received a report containing the incorrect item.- Validation of Debt:
Upon your request, debt collectors must provide written verification of the debt, including the amount owed and the name of the original creditor. You have the right to dispute the debt if you believe it is inaccurate or if you require more information. - Cease and Desist:
You have the right to request that a debt collector stop contacting you. Once you make this request in writing, the debt collector can only contact you to inform you about specific actions they will take, such as filing a lawsuit. - Verification of Creditor:
If you dispute a debt within 30 days of receiving the initial written notice, the debt collector must provide you with the name and address of the original creditor. - Prohibition of False or Misleading Representation:
Debt collectors cannot use deceptive or misleading tactics, such as falsely representing the amount owed, making false threats of legal action, or misrepresenting their identity or affiliation. - Right to Sue:
If a debt collector violates the FDCPA, you have the right to sue them in a court of law within one year from the date of the violation. You may be entitled to damages, including actual damages, statutory damages, and attorney’s fees.
- Validation of Debt:
It’s important to familiarize yourself with the full text of the Fair Debt Collection Practices Act or consult legal professionals to understand your rights and protections in debt collection situations.
