“The Good, The Bad, and the Ugly”--Assessing your credit situation—
How your score is calculated
The credit reporting agencies: “Big Brother”
Data furnished by your creditors is collected, stored, and updated by credit
bureaus (aka “credit reporting agencies”). Think of the credit reporting agencies
as a “big brother” that keeps tabs on you. And they are in the business of selling
information about you to interested lenders. They might commonly be referred
to as credit “bureaus” which gives them an almost “government” run image, but
they are simply “for-profit” companies like any other big corporation.
Why do all three of my reports have slightly different information?
Because they're competitors, the bureaus typically don't share information, and
not all lenders report information to all three bureaus. In fact, if you get copies of
your credit reports from the bureaus on the same day, you're likely to notice at
least a few differences among them. An account that's listed on one credit
bureau's report might not show up on the others, for example, or the balances
showing on your various accounts might differ from bureau to bureau.
For this reason, your credit score with each credit reporting agency differs
depending on which bureau's credit report is used.
Also, each time you or someone else pulls your credit for review, it's likely to be at
least somewhat different, because the information on which it's based probably
has changed. Fair Isaac Company (FICO) says most people's scores don't change
all that much in a short period, but about 25% of consumers can expect to see
their credit scores from any one reporting agency vary by more than 20 points
over a three-month timeframe.
There are time limits to what can appear on your credit report. Although positive
information can appear indefinitely, negative marks like late payments, collection
accounts, and foreclosures must be removed after seven years by federal law.
Bankruptcies can be reported for ten years. Inquiries should be deleted in two
