Government Credit Report
|
A free government credit report is available to every American citizen who has a social security number and any kind of borrowing history. Instead of having to pay about ten bucks a piece for a report from each of the three big reporting bureaus, Congress has passed the federal Fair Credit Reporting Act giving credit overview access to that dark and mysterious document that really does control many lives. A soiled borrowing report can tank a mortgage loan, an apartment rental, a chance for a car, a student loan and even a job opportunity. Experian, Equifax and Trans Union must provide the knowledge each company has about our borrowing histories which craft the actual scores we are destined to wear to every place we ever ask for a loan. Going for any loan without knowing one's FICO score is like walking into a shoe store in bare feet and trying on those ninety dollar basketball shoes without socks on. It's a recipe for getting asked to leave the store and being turned down for that loan.
If a person never cared one bit about identity theft, he ought to be concerned about where he stands on the credit food chain. A free and mandated government credit report can do that very thing. And since Americans can actually do something to raise their FICO or credit score, ramped up interest in how these scores are put together ought to be of interest to all. The equation for a FICO score is formulated by the information on a consumer's borrowing history overview. And once that equation is understood, the overview and score become less dark and mysterious.
When a consumer orders the free government credit report from each of the bureau giants and takes a look at all the information, much of it hard to understand, the temptation may be to just throw the overview away in frustration. But there are websites that can help a person make sense of the codes and language. Typing in "understanding a credit report" in one's web browser will get the user the information needed. In the meantime, finding out how the equation works is good reading until the reports arrive. "Thou shalt love the Lord thy God with all of thine heart, and with all thy soul, and with all thy might." (Deuteronomy 6:5)
Think of a FICO overview as a five legged table. Each of the legs represents part of how the final FICO score is arrived at, but some of the legs are more important than others. When a consumer's government credit report arrives, the information on that account is given various weights that affect the FICO number. The two most important pieces of information on the report are payback integrity and depth of debt. Payback integrity measures the commitment a consumer has had to paying back loans on time every month. Depth of debt measures actual money borrowed against the debt ceiling of each account.
Pay back integrity is a scan of late payments, no payments, bankruptcies and repossessions. A couple of 30 day late payments spread out over a two year span are not a big splash in the pool but one ninety day late payment is a belly flopper! Some experts even compare a ninety day late payment to a bankruptcy or a lien when describing its seriousness. Depth of debt looks at how much of the allowable borrowing power has been used in each account. Differing views can be found on what percentage of an account is a negative drag on a FICO score, but most everyone agrees that sixty percent is too high and begins to affect the bottom line number. These first two legs of the FICO equation can be easily seen on a free government credit report.
While the first two legs are worth 65% of a FICO's score, the remaining three comprise just 35%. The third leg might be called history longevity. This part of the FICO equation measures how long the consumer has used borrowed money with the reasoning that a longer history gives a better snapshot of payback integrity. The last two legs are loan types and borrowing curiosity. The loan types leg scans for the kinds of loans that a consumer has had. Just having revolving charge accounts can actually pull a score down, but if a person has successfully paid down an installment loan and a finance company loan, the government credit report score can go up. The borrowing curiosity leg counts how many times you have said yes to, "Would you like for me to run your social security number to see if you qualify?" More is definitely not better on a free government credit report.
Financial experts are quick to point out that when ordering the free reports, care should be taken to only order one each four months. Doing so will give a person a full year of coverage in monitoring their FICO account. On the other hand, if a person does not want a government credit report, there are a number of online companies that will provide a report any time one is desired by the customer. The cost is reasonable at about fifteen dollars a month. And while the reports that are provided free once a year will not include a FICO score, the online services provide scores at the bidding of the customer. For peace of mind, order the free report soon.
|
|
|
|
