When credit reports were first registered, their purpose was commonly and frequently served for showing how reliable an individual might be when applying for a new credit line or a loan.

In time, these credit reports started to be used also for closing insurance deals and getting a job that has to do more or less with finances. Thus an individual can nowadays face a decline when applying for such a job or be denied a certain form of insurance if his credit report presents negative points.

A credit reporting company is a business that deals with collecting, organizing and selling credit information to consumers. Three main agencies are there in USA that are known as major ones in credit reporting, such as Experian, Equifax, and TransUnion.

Once credit reporting agencies were established, there should have been a higher body to regulate their activity and to make sure that there is an accurate job they are doing. This is how FCRA was enacted – to protect consumers from being unfairly treated due to incomplete and/or false information introduced into their credit report.

Federal Credit Reporting Act

This law sees to it that consumers have the right to dispute any wrong information they may find on their credit report issuing a dispute to the respective credit bureaus. These agencies have a period of 30 days to either check the accuracy of their report or remove the errors existing in it.

Another right that the consumer can benefit under FCRA is the annual receiving of a free credit report from the credit reporting agencies. To get this free copy of your credit report you should submit a request and you can proceed in asking for another copy in case you are denied from a new credit that you want to make and the lender indicates the agency that has presented to them a negative credit report.

It is the negative credit report that has determined the lender to decline your request and as such the credit report agency must send you a copy and see according to what negative data you haven’t been approved for the loan.

FCRA can also regulate the period of time under which negative information can be kept on an account. For instance, a delinquency can remain on a credit report for a period of 7 years, a bankruptcy for 10 years and in case there was a tax lien, the time is reduced to 7 years after this one is paid off.

Why Strive for a High Credit Score?

Most importantly, you’ll qualify for lower interest rates, which will translate into real savings on any loan you take. Also, people trust you much more when they see you have a high credit score – a priceless asset.  In short, your credit score is not something you want to be low. Here are the top factors that are used to determine your credit score.

Your Payment History

Probably one of the most obvious factors in determining your credit score is how consistent you are with making your payments. When you pull out a loan, no matter how big or small it is, you need to be sure to pay on time every time. Doing this shows the credit bureaus that you’re someone worth trusting with a loan.

How Much You Owe

Another very important factor in determining your credit score is how much you currently owe compared to your total available credit. Your credit score tells creditors how likely it will be that you pay your debt back in full, and having your credit maxed out isn’t a good indicator that you’ll be paying any new debts off. Try to pay off your current outstanding debts and attempt to raise your credit limits to give you a better ratio.

Your Credits Age

Although not as important as the previous two factors, your credit’s age is defiantly a big indicator in how high your credit score is, mostly because it’s easier to see a person’s behavior patterns over an extended period of time, when if the person has had credit for a short amount of time you can’t really tell how the person reacts under pressure. Significant credit boosts have been given to people that were able to pay their bills in-full and on time even when they had lost their jobs, one of the positive benefits of a high credit score.

Small Past Debts You’ve Forgotten About

Many people have empty credit cards that they have just for emergencies. These credit cards are hardly ever monitored because no charges are ever made on them. The problem with this is that whoever puts charges on this empty card, whether it’s you accidently with a recurring monthly payment, or a thief, you may not know about it, and thus you won’t pay off the debt. After you’ve left your debt unpaid, no matter how small it may be, it will likely be reported to a credit bureau which will put a major dent in your credit score. This can easily be avoided by occasionally checking your credit score with a free credit report and acting on fixing the issue before it impacts your score.

Company Mistakes

From time to time companies will accidently report you for not paying your bills when you really do. If this goes unchecked you may be unable to fix the problem after a certain period. With a free credit report done every once in a while you’ll be able to catch these little errors and report them; the mistakes are almost always fixed immediately and removed from your credit score.

What You Can Do to Raise It:

Raising your credit score isn’t too difficult, but you’ll definitely want to check at least one free credit score report monthly to make sure there aren’t any major issues. To raise your credit score all you have to do it pay all your bills on time; it’s that simple. When you use your credit card, pay it off every month. Pay your mortgage on time and in full every time payment is due. Every chance you have to pull some credit and pay it immediately take advantage of it. Be sure to pull up a free credit score report before you try to pull any loans to make sure your score is where it needs to be before requesting a new loan.

Who Looks at Credit Scores:

While creditors and loaners are the main users of credit scores many other establishments, such as insurance companies, will base their rates on you largely on your credit score. You’ll also find yourself unable to buy many things, such as new cars and cell phones (with monthly plans) unless you have an adequate credit score. They too take advantage of free credit score reports so they always keep up to date with how you’re doing financially.

Who Determines Credit Scores:

Every company that gives you their product/service in advance before your payment can affect your credit score, with the big 3 credit bureaus being the ones that accept complaints and calculate your score. If a mistake is ever made on your credit report be sure to contact one of the big 3 credit bureaus (Equifax, TransUnion, Experian) and get it fixed. You should contact the credit bureau if there truly was an error made on your report and request that it be corrected.

Certain merchant websites may ask for your social security number and payment details, which you should absolutely avoid. To avoid risk of fraud you should look for the padlock logo usually located at the top area of the browser, as that identifies the connection to the merchant website as secure. Also, buy only from merchants who’s secure web page asks for the 3 digit security code from the back of your card.

Online purchases will require your name and address along with telephone number and that they match with the information you’ve provided to the credit card issuing company. Any difference observed will lead to declining the card transaction.

While booking hotels and accommodations with a credit card online, the money required for your reservation and duration of stay is kept on hold and that amount cannot be utilized elsewhere. Another factor is when you need to return a product which was bought with a credit card online, it is essential to produce the card that was used for that purchase. Some merchants return the money by providing a store credit that can be used for future purchases at with that merchant, but most will simply credit the card back then the refund can be available in your account your card within seven days, or sometimes sooner.

Though remote, there is always a chance of internet theft occurring, and therefore the credit card companies are constantly developing methods to protect their client (and ultimately themselves) from such fraud. However, by keeping a watchful eye on your credit card statements you should be able to detect the fraudulent use of your card and notify the provider company immediately.