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Your Credit Score and the Law

On Behalf of | Feb 28, 2019 | Consumer Protection, Credit Reporting Agencies, The Fair Credit Reporting Act

Your credit history and credit report determine what you are financially eligible to receive in credit and loans. Knowing what is reported on your report and an awareness of the law will ensure you have the financial opportunities you are entitled to and worked so hard to get. The Fair Credit Reporting Act (“FCRA”) is the consumer statute that was enacted to protect your rights. It regulates the collection, dissemination, and use of consumer information.

Credit Reporting Agencies

When it comes to disseminating your information, there are three main credit reporting agencies, Equifax, Experian, and TransUnion, as well as a large number of smaller bureaus. These agencies report your information on a credit report to you, lenders, and employers looking to extend you credit, insurance, or employment. There is, however, a fair amount of confusion when it comes to understanding what a credit reporting agency actually does.

Credit Reporting Agencies Collect Data

First, credit reporting agencies collect data. This data includes any and all of your personal identifying information, including your name, addresses, social security number, aliases, etc. This data also includes all of your credit accounts from 7 years prior to the present. The accounts are reported to the credit reporting agencies by the lenders. Not all lenders report your account information and they are not required to report by law. For example, utility companies usually do not report your accounts to the three big bureaus unless you have negative account information.

Credit Reporting Agencies Provide Reports

Next, credit reporting agencies provide reports to both lenders and to you, upon request. If you are applying for credit or looking for a job, a lender can request to review your report with your permission. Lenders are looking at your report to determine whether or not to approve you for credit and how likely it is that you will repay your loan. Obviously, the more positive accounts you maintain and positive credit history you have, the more likely you are to get approval. You can also review your own report at any time. Under the FCRA, you are entitled to view a copy of your report once a year at no charge, so you can see the information reporting from each of the three big credit bureaus. The easiest way to do this is to log on to and request a copy.

Credit Reporting Agencies Provide Information to Calculate Your Credit Score

Lastly, while credit reporting agencies do not calculate your score specifically, they do provide the information used to create it. There are five factors used to calculate your score, each contributing to your total score. The most important factor is your payment history and, just behind, is credit usage, or the amount you owe, which is more formally referred to as credit utilization. The next most important contributing factor to your score is the length of your credit history. Lenders want to know you are not new to the financial marketplace before they lend you money. Fourth, is your mix of credit accounts and different types of credit. Last, is having recent accounts. Taking these five factors into account from information obtained in your credit report, credit scoring companies, like FICO and VantageScore, can calculate your score and provide it to lenders upon request. Currently, there is nowhere in the FCRA that entitles you to a free copy of your score, so you will have to purchase it if you want to see where you fall.

If you believe your rights have been violated under the FCRA or you would like the advice or assistance of counsel, contact SmithMarco, P.C. for a completely free case review.