Credit & debt management

To master your credit worthiness, it pays to understand the score

Aug 10, 2011

Credit scores are mathematical summaries; the information that counts is buried deeper

“What’s your credit score?” That might be the question. But the answer is another question: “What’s in your credit file?”

Since an update in the Fair Credit Reporting Act that took effect in 2004 and 2005, all Americans have the right to receive free copies of their credit files annually from credit reporting agencies. In the wake of that change, the credit reporting agencies and related companies have stepped up their efforts to market a wide range of credit-related products to consumers: credit scores, credit watch services, credit protection plans and more.

If you want to manage your credit effectively, go right to the source and review the data that the credit reporting agencies use. That’s the advice of the personal financial planning experts at The Ohio Society of CPAs. Then you will have the opportunity to correct inaccuracies and review corrections – all at no charge.

The rise of the credit ‘score’

A typical credit report provides users with several pages of detailed information about an individual’s financial past. It lists bank accounts, credit cards, revolving credit accounts, loans and other financial transactions. The report has details about current payments, past history of payments on current accounts and similar information about accounts that have been closed. In short, there is a lot of detailed information and numbers.

FICO, formerly known as Fair Issac, is a company founded in 1956. Its first major product was the FICO score – a numerical summary of all the data in a person’s credit file that would give a credit manager a quick, easy way to determine if the potential customer was creditworthy.

Today, FICO has numerous competitors in the credit score business including the major credit agencies. Each offers its own tweaks to the service, but the underlying principle remains the same: analyze the data in a credit file to give a quick, easy to understand summary.

Get to the source

If you want to understand and possibly improve your credit worthiness, start by taking advantage of your right to review your credit file. For direct, commercial-free access to credit reports online, go to You will have to provide the site with your Social Security number. is the only source authorized by the Federal Trade Commission (FTC) for access to free credit reports. Other websites may require you to provide a credit card number and will try to sell you products such as credit scores and protection plans.

Another quick and efficient way to get your free credit report is to order it by telephone. Each system will initially direct you to its web site, but eventually, you will have the opportunity to order a free “credit file disclosure” that will be delivered by mail. You will need your social security number, date of birth and address to obtain the report. The three major sources from which to request your report are:

  • Experian: Call 888.397.3742. Provide your area code and choose option 1 when the phone system starts directing your call. You will get a confirmation number at the end of the call.
  • Equifax: Call 800.685.1111. This system takes the longest time to get to the ordering process. It will provide a confirmation number.
  • TransUnion: Call 800.888.4213. This system makes a long sales pitch after taking your information to encourage you to sign up for credit protection. You will not receive a confirmation number from the system.

Correcting information in your credit file

Under the terms of the Fair Credit Reporting Act, credit agencies are responsible for correcting inaccurate or incomplete information in your credit file. To make corrections to your file, send a “dispute letter” to the credit agency. Include copies (not originals) of the information in question and any backup documentation that you have to support your position.

The credit agency is required by the law to respond to your letter within 30 days. For more information about correcting errors visit the FTC website at Search for “Building a Better Credit Report” for an excellent overview and detailed “how-to” information.

I can’t wait – give me a credit score now

If you’re simply curious about how your credit file looks and want a quick overview – a credit score – you can visit This website, launched in February 2008, uses data from Experian to provide a FICO-like credit score. The website offers credit protection and a variety of other paid services, but creating an account is free and it will not require you to provide a Social Security number. According to information from the site, the company is part of the Intuit corporate family. The site has favorable reviews by reputable sources such as the Wall Street Journal and web searches do not reveal any complaints of abuse or fraud.

Consult Your CPA

Professional financial advisors strongly encourage individuals to review their credit reports annually. It’s an opportunity to be proactive and address issues rather than waiting and reacting to a bad credit score. As you review your financial situation and chart your future plans, remember that your local CPA can help. He or she can offer the advice and information you need to make smart financial decisions.