It’s Your Money Column – Credit Reports

Question: I know a lot goes on behind the scenes related to credit reports. How does this affect me?

Answer: It is important to remember that your credit report is not just for your information. Your credit history is the business of companies who sell insurance, lend money for home mortgages, rent homes and employ you. These companies subscribe to the services of credit reporting agencies that collect information about you and provide it to them for business purposes.

Your credit history is a written record that summarizes what type of credit you have used and your history of making payments on time. As a consumer, you have a right to see your credit report from each of the three credit reporting agencies, but, until recently, one of the most important pieces of information that companies could get about you – your credit score – was not available to you.

Called a FICO score, which is based on a complex formula created by Fair, Isaac & Co., your FICO score is widely used to evaluate whether you will be granted credit and at what rate. Your score also determines auto and homeowner insurance rates, mortgage rates and more. Most of us want the best FICO score we can get, and to help toward that end, Fair Isaac has decided to market additional services directly to consumers.

For a fee, Fair Isaac will teach you how your score is compiled and how to improve it. People planning to refinance mortgages can learn to get better interest rates by upping their credit scores. Another fee-based service lets you know if someone is stealing your financial identity.

You can learn about your FICO score on the Web at For $12.95, you can see your FICO report online for 30 days. In answer to criticism that explanations of credit factors are too vague, Fair Isaac plans to add a calculator to this site in the next month so consumers can try out different ways to raise FICO scores.

Although the opportunity for consumers to learn to better their credit scores is not perfect, it is worth it for most of us to delve more deeply and understand these scores better. Low FICO scores result in higher charges for many financial products. Some people can raise their scores by canceling unused credit cards. In other cases, it means avoiding additional debt and making sure there are no errors on your credit report.