Personal Finance

How long is your credit history? Generally, models consider the length of your credit track record.
An insufficient credit history may have an effect on your score, but that can be offset by other
factors, such as timely payments and low balances.

Have you applied for new credit recently? Many scoring models consider whether you have applied
for credit recently by looking at "inquiries" on your credit report when you apply for credit. If you have
applied for too many new accounts recently, that may negatively affect your score. However, not all
inquiries are counted. Inquiries by creditors who are monitoring your account or looking at credit
reports to make "prescreened" credit offers are not counted.

How many and what types of credit accounts do you have? Although it is generally good to have
established credit accounts, too many credit card accounts may have a negative effect on your
score. In addition, many models consider the type of credit accounts you have. For example, under
some scoring models, loans from finance companies may negatively affect your credit score.

Scoring models may be based on more than just information in your credit report. For example, the
model may consider information from your credit application as well: your job or occupation, length of
employment, or whether you own a home.

To improve your credit score under most models, concentrate on paying your bills on time, paying
down outstanding balances, and not taking on new debt. It’s likely to take some time to improve your
score significantly.

How reliable is the credit scoring system?

Credit scoring systems enable creditors to evaluate millions of applicants consistently and impartially
on many different characteristics. But to be statistically valid, credit scoring systems must be based
on a big enough sample. Remember that these systems generally vary from creditor to creditor.

Although you may think such a system is arbitrary or impersonal, it can help make decisions faster,
more accurately, and more impartially than individuals when it is properly designed. And many
creditors design their systems so that in marginal cases, applicants whose scores are not high enough
to pass easily or are low enough to fail absolutely are referred to a credit manager who decides
whether the company or lender will extend credit. This may allow for discussion and negotiation
between the credit manager and the consumer.

What happens if I am denied credit or don’t get the terms I want?

If you are denied credit, the ECOA requires that the creditor give you a notice that tells you the
specific reasons your application was rejected or the fact that you have the right to learn the
reasons if you ask within 60 days. Indefinite and vague reasons for denial are illegal, so ask the
creditor to be specific. Acceptable reasons include: "Your income was low" or "You haven’t been
employed long enough." Unacceptable reasons include: "You didn’t meet our minimum standards" or
"You didn’t receive enough points on our credit scoring system."

If a creditor says you were denied credit because you are too near your credit limits on your charge
cards or you have too many credit card accounts, you may want to reapply after paying down your
balances or closing some accounts. See the link below for Consumer Debt Management. Credit scoring
systems consider updated information and change over time.

Sometimes you can be denied credit because of information from a credit report. If so, the FCRA
requires the creditor to give you the name, address and phone number of the consumer reporting
company that supplied the information. You should contact that company to find out what your
report said. This information is free if you request it within 60 days of being turned down for credit.
The consumer reporting company can tell you what’s in your report, but only the creditor can tell you
why your application was denied.

If you’ve been denied credit, or didn’t get the rate or credit terms you want, ask the creditor if a
credit scoring system was used. If so, ask what characteristics or factors were used in that system,
and the best ways to improve your application. If you get credit, ask the creditor whether you are
getting the best rate and terms available and, if not, why. If you are not offered the best rate
available because of inaccuracies in your credit report, be sure to dispute the inaccurate information
in your credit report.

Where can I get more information or file a complaint?

General Tips
- The Federal Trade Commission (FTC) is the nation's consumer protection agency. Here are some tips
from the FTC to help you be a more savvy consumer.
- Know who you're dealing with. Do business only with companies that clearly provide their name, street
address, and phone number.
- Protect your personal information. Share credit card or other personal information only when buying
from a company you know and trust.
- Report fraud. If you think you've been a victim of fraud, report it. It's one way to get even with a
scam artist who cheated you. By reporting your complaint to 1-877-FTC-HELP or ftc.gov, you are
providing important information to help law enforcement officials track down scam artists and stop them!

The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the
marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint
or to get free information on consumer issues, visit www.ftc.gov.

The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into
Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement
agencies in the U.S. and abroad.