Free Credit Scoring
This term may have been a taboo a few years ago because up until the new millennium, there is no such thing as free credit scoring. In fact, although many people recognized the existence of credit scoring and that they knew how credit companies computed and used their credit scores to decide on the approval of their loan or what interest rate to give them, lenders were prohibited to give their clients their corresponding credit scores.
Credit score had been a closely protected secret in the lending industry and you may not believe it but many Americans didn't even know such a number existed. In the past, credit scores were not divulged since according to credit and finance authorities at that time, the score was acquired through a complex analysis of financial data that an ordinary person who has no knowledge in credit and accounting may have trouble understanding or might even misinterpret it. Also, another reason is that the industry feared that if people knew their score, they might adjust their behavior to manipulate their credit score or devise ways to bypass the credit scoring model already established.
However, all that changed in 2000 when E-loan, an online lender, surprisingly offered to give people their credit scores for free. What is more, they provided a detailed explanation on how the score was computed and how people could improve or make their credit scores higher. Unfortunately, FICO found out about it and cut off the company from their sources of credit reports thus stopping them from giving away free credit scores.
That incident was followed by a public outcry with numerous people trying to find out more about credit score and demanding to see it. The idea of denying credit to customers based on bad information in their credit reports created a chip to consumers' rights and eventually led to states making legislations and laws to solve this problem and protect the privileges of consumers. As a result, people and credit companies accepted an open attitude and awareness of credit scores. The Federal Trading Commission is the nation's consumer protection agency and they are one of the forerunners in advocating free credit scoring to people. They want people to know how credit scoring works, how it is computed and what's it for. Although there are websites and credit scoring companies online that offer to give people their credit score for a couple dollars, free credit scoring is one of the consumer's privileges today. Officially approved in 2005, everyone is entitled to a free credit report including their credit score from each of the three credit scoring bureaus: Equifax, Experian and Transunion. They can request for such document copy from a credit bureau every twelve months or valid only once per year.
Credit Scoring
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