A credit report is a detailed report of an individual’s credit history prepared by a credit bureau and used by a lender in determining a loan applicant’s creditworthiness.  A credit report includes identifying information, credit accounts and loans, bankruptcies and late payments and recent inquiries.  Credit reports can be obtained by prospective lenders with the borrower’s permission to determine his/her creditworthiness.

The provisions of Fair and Accurate Credit Transactions Act (FACTA) give new rights to free credit reports.  The Act also provides new rights to obtain one’s credit score.  Under FACTA consumers have the right to obtain one free copy of credit report from each of the three major credit bureaus Equifax, Experian, and TransUnion — every 12 months.  Federal Trade Commission (FTC) provide for free credit reports to become available in stages.  FACTA also requires the major credit bureaus to provide a single point of contact so that a person can request reports from all three companies with one toll-free phone call, letter or Internet request.

Everyone with a credit record also has a credit score.  Credit score is the number calculated by a credit bureau, a lender or another company based on a credit report.  One of the most common types of credit score in the United States is the FICO score.  The FICO score takes into account various factors in each of these five areas: payment history, current level of indebtedness, types of credit used and length of credit history and new credit in determining credit risk.  A credit score is intended to help lenders and other users of credit reports make reasonable decisions as quickly and efficiently as possible.  Credit score can be an important factor in getting a loan with an attractive interest rate or even obtaining an insurance policy at a low price. Prior to FACTA, some providers of credit scores voluntarily made them available to consumers.