Why having a positive credit report and score is important
Almost everyone has a credit report and score.
Each of the three major U.S. credit reporting companies (also known as credit reporting bureaus or agencies)—Equifax®, Experian™ and TransUnion LLC—separately and continuously collect an individual’s personal financial history. These agencies track how consumers use and manage their credit—including, but not limited to, information on account openings, payment history, outstanding debts, credit inquiries and public records such as bankruptcies—to compile a comprehensive credit report and a related credit score. A credit report is a historical list of financial transactions that covers years of a person’s life. A credit score is a single number, typically ranging from low to high, that distills your entire credit history into an overall rating –such as poor, fair, good, very good or excellent. The actual number ranges usually start at 300 and go up to 850.
A positive credit report and a medium to high credit score are important because they have significant and long-lasting influence on a person’s life. They can affect the ability to get a mortgage, rent a home, own or lease a car, get utility service for a home, obtain a personal loan or insurance policy, apply for a job or credit card, and other activities dependent on your credit history and perceived credit reputation by financial companies and potential employers.
A bad credit report and score can have very negative effects for years, ranging from the inability for a consumer to buy a car on credit via a loan to not being able to even be considered for a job where a strong personal financial rating and reputation is necessary, such as with a bank or credit union. Because a strong—or even moderately good—credit report and score are often necessary, those without them may feel increasing pressure to improve. Individuals may be tempted to use credit repair companies, some of which promise quick and unrealistic results.
The demand for better credit has fueled a persistent industry of credit repair scams, preying on consumers hoping for a quick fix to long-term credit issues. Unfortunately, these schemes often lead to wasted money and a credit reputation that remains just as damaged. Online, social media, billboard, email and mail advertisements may all tout the benefits of credit repair services, but many of them have no real ability to influence credit reports and scores, other than working to manage inaccurate information, which a consumer can do for themselves at no cost.
What to watch out for with a credit repair company—what to expect and warning signs of potential scammers
If you are hiring a credit repair company, beware of unethical and dishonest statements and actions that could be warning signs of a scamming operation. As they prey on the frustration and vulnerability of those with low credit ratings, scammers will say and do things that will not help their victims and may cause them more harm than their current poor credit reputation. Think about these points if you’re looking at a credit repair company:
- Be careful of any company that claims it has specialized experience, knowledge, techniques or personal relationships with credit bureaus that allow it to achieve superior results beyond what you could accomplish for yourself with some time and effort. There are no magic fixes for bad credit.
- Have the credit repair company explain exactly what they will do; what the timetable is for their actions; what they consider to be a realistic outcome for your situation; and when that outcome is likely to occur? How will success be measured –and will it be worth your hard-earned money?
- Ask the company about references from previous or current customers. Can they connect you with individuals who can speak credibly about their experience and the company's effectiveness?
- Avoid any credit repair service that requires an upfront payment before it generates any provable results that could benefit you. Just as you wouldn’t pay a house painter or car mechanic before the work is completed and you consider it to be satisfactory, don’t pay a credit repair operation before it does anything for you. Also, advance payment may be illegal under government legislation, the federal Credit Repair Organizations Act. According to the U.S. government consumer protection agency the Federal Trade Commission, this Credit Repair Organizations Act “prohibits untrue or misleading representations and requires certain affirmative disclosures in the offering or sale of "credit repair" services. The Act bars companies offering credit repair services from demanding advance payment, requires that credit repair contracts be in writing, and gives consumers certain contract cancellation rights.”
- A credit repair service does not have the authority to change true negative information in a credit report, and it’s not helpful for a credit repair service to dispute accurate, evidence-based negative information with a credit reporting bureau. Credit bureaus have no responsibility for changing true, verifiable information because a consumer requests that it be altered or eliminated.
- Don’t work with a credit repair service that does not want you to contact the credit agencies directly, such as to check if their work has resulted in credit report changes. A consumer has a right to contact credit agencies at any time regarding reports and scores.
- Do not work (or continue to work) with a credit repair service that recommends you put false, inaccurate, incomplete or otherwise misleading information on applications for credit cards, loans or jobs. Not being honest on any application could eventually cause much more damage to your credit reports and rating. Giving false information for financial services or employment opportunities also has the potential for creating personal liabilities, since providing untrue personal details may be illegal under state or federal laws.
- Check online reviews for the company, such as with the Better Business Bureau® or other well-known commercial rating services where there may be numerous evaluations of the company’s performance over time.
How to get a copy of your credit reports at no cost
According to U.S. law, consumers have been entitled to obtain one free credit report annually from each of the top three credit reporting companies mentioned above. However, the three companies have permanently extended a program that lets you check your credit report from each of them once a week for free at annualcreditreport.com. Also, everyone in the U.S. can get six free credit reports per year from Equifax through 2026 by visiting annualcreditreport.com. Those six reports are in addition to the one free Equifax report (plus your Experian and TransUnion reports) that you can get annually at that website.
To request a copy of a credit report, go online to annualcreditreport.com, and follow its instructions to request a report, or call 1-877-322-8228. That site—and only that site—is authorized by the federal government to provide free credit reports.
Each credit reporting company has its own process for collecting financial information; consequently, their reports may be similar, but they are not exactly the same. If you’re doing a credit report review, it’s a good idea to get a copy of your credit report from each company—Equifax, Experian and TransUnion.
Look into free, personal financial advice from BALANCE™ on a range of topics, including credit reports and managing debt
BALANCE™ is a financial education and counseling organization that offers free services to Delta Community members. Some of its services include credit report reviews, debt management, and information on budgeting, money management and home buying.
Visit the BALANCE™ website to learn about their education and assistance programs. Members can also speak with certified credit and housing counselors to get personalized guidance.
Want to connect with a Financial Coach about your specific situation? Chat online, e-mail, or call 1-888-456-2227 to speak with a Financial Coach today.
Note that the services offered through BALANCE™ are separate and distinct from any business conducted with Delta Community and are not guaranteed by, nor are they obligations of, the Credit Union.
Would you like to check out more ways to try to avoid scams and losing money?
More information on protecting yourself and your accounts—along with financial guidance—is available from free Delta Community Financial Education Center webinars on many different money-related topics. You can visit the Financial Education Center's Events & Seminars page to register for its no-cost, on-demand webinars.
Delta Community’s blog and security posts have a lot of advice on handling online personal security:
