By Attorneys Raymond Dall’Osto, Jaclyn Kallie and Zak Wroblewski
The Federal Trade Commission FTC) announced in an October 2023 consumer alert, that Americans now have free weekly access to their credit reports, from all three major credit bureaus.
In the 1990’s, Congress first allowed for a free annual credit bureau check. During the trying times of the Covid-19 pandemic, several major credit bureaus changed their policies to allow for free weekly checks and access to your full credit bureau report.
When people talk about your credit, they mean your credit history. Your credit history describes how you use money. For example:
-
How many credit cards do you have?
-
How many loans do you have?
-
Do you pay your bills on time?
How you handled your money and bills in the past will help lenders decide if they want to do business with you. Your credit history also helps them determine what interest rate to charge you.
-
If lenders see that you always pay your bills on time and never take on more debt than you can pay back, they’ll generally feel more confident doing business with you.
-
If they see that you’re late on your payments or owe more on credit cards or loans than you can repay, they might not trust that you will pay them back.
Lenders, landlords, insurance companies, and potential employers are a few examples of who might look at your credit history. Your credit history can make a big difference when you
-
apply for a loan or credit card
-
look for a job
-
try to rent an apartment
-
try to buy or lease a car
-
try to get rental or home insurance
Because these lenders, landlords, and others care how you handle your bills and other financial decisions, you should care about your credit, too, particularly to correct inaccurate information and for early detection of identity theft. See, https://consumer.ftc.gov/articles/understanding-your-credit and https://consumer.ftc.gov/identity-theft-and-online-security
“Good” or “bad” credit is based on a person’s credit history. You can find out what your credit history looks like by checking your credit report. Your credit report is a summary of your credit history. The three nationwide credit bureaus — TransUnion, Equifax, and Experian — collect credit and other information about you which form the basis for your credit ratings.
Using a statistical program, companies compare this information to the credit behavior of people with similar profiles. Based on this comparison, the statistical program assigns you a score. Usually, credit scores fall between 300 and 850. A higher score means that you have “good” credit: businesses think you’re less of a risk, which means you’re more likely to get credit or insurance — or pay less for it. A low score means you have what businesses see as “bad” credit, which means it will be harder for you to get a loan or a credit card — and you’re more likely to pay higher interest rates on credit you do get.
Be a vigilant guardian of your credit and financial information. Don’t confuse your credit report with your credit score.
Don’t be scammed. Familiarize yourself with the FTC and Consumer Financial Protection Bureau (CFPB) webpages and resources: https://consumer.ftc.gov/ and https://www.consumerfinance.gov/
Don’t be fooled into paying money for the free credit reports you now can obtain on a regular basis. Go to https://www.annualcreditreport.com/index.action for your free weekly credit reports.
