Financial Literacy 2007 - Credit scores
ABCs of credit reports

Checking your credit score before you apply for a major loan is a must if you want to find out where you stand in terms of credit risk. Yet checking your credit report also proves worthwhile before you put in an application. Put simply, "The credit report is the raw data. A credit score is the result of a formula applied to that credit report information," says Craig Watts, public affairs manager for Fair Isaac Corp., the creator of the FICO score.

Since your credit score is based on information in your credit report, you'll want to check your report well in advance of applying for a major loan to check for inaccuracies and other data that could harm your score. If you have fantastic credit, you should check your credit reports a couple of months before applying for a major loan or refinance to verify where you stand, says John Ulzheimer, president of consumer education for If you have poor credit, check six months in advance to see if there's anything you could do to improve your credit score, he says, such as paying off collection accounts or paying down large balances.

“The credit report is the raw data. A credit score is the result of a formula applied to that credit report information.”

More than one score, credit report

That doesn't mean you have only one score based on one report. Three national credit reporting agencies maintain credit history information on consumers as data gets reported to them by lenders. These agencies separately furnish credit reports to both paying subscribers and consumers requesting their own file. Lenders can choose not to report to all three bureaus, which means you might discover discrepancies among each report produced by each agency. With that in mind, it's a good idea to check your credit reports at all three bureaus, as your credit risk score can vary depending on which report it's based on.

Getting a report

You can order one free credit report every 12 months from each of the big three national credit reporting agencies, Equifax, Experian and TransUnion, by logging on to, by calling (877) 322-8228 or by completing and mailing the request form (PDF) to Annual Credit Report Request Service at P.O. Box 105281, Atlanta, GA 30348. Residents in Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey and Vermont can also get free additional reports by ordering them directly from the agencies, thanks to their state laws.

If you have been denied credit, you are entitled to a free copy of your credit report. After using up your free credit reports, you may purchase them from the credit bureaus.


Once you get your credit report, you'll notice that the information contained in it is organized in sections: your personal information, credit summary, account information, inquiries, collections and public records, along with summaries of your rights under state law and the Fair Credit Reporting Act, plus instructions on how to dispute information found in your report.


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