The credit scoring system that is used today has evolved a great deal since 1958 when it was first introduced. One fact that remains the same is that it provides lenders with a financial profile on consumers who wish to borrow money. A lenders’ biggest concern is whether or not an individual has the ability to repay the loan per the agreement. The credit scoring system establishes a percentage of risk that might be involved in repaying of that loan.
In 1971 Congress passed the “Fair Credit Reporting Act” to establish guidelines for fair practices in regard to the use of credit scoring. This law was designed to promote accuracy in reporting and protect the privacy of consumers. In light of the increased use of credit scoring and a growing fear of identity theft, recent legislation has been passed to further protect Americans and improve consumer awareness.
The “Fair and Accurate Credit Transactions Act of 2003” (sometimes referred to as The “FACT ACT” or “FACTA”) was signed by President George W. Bush on December 4, 2003. This amended the Fair Credit Reporting Act, enabling each American to obtain one free credit report every 12 months from each of the three main credit reporting agencies (CRA’s); Equifax, Experian and TransUnion.
Those bureaus have created a central web site, annualcreditreport.com, to accommodate all of us who wish to obtain a copy.
I encourage everyone to visit this website and view their credit report. 79% of credit reports contain inaccurate information which most likely affects your score negatively.
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