[5] The Federal Trade Commission states that one large credit bureau notes 95 percent of those who dispute an item seem satisfied with the outcome.
[6] The other factor in determining whether a lender will provide a consumer credit or a loan is dependent on income.
With the adoption of risk-based pricing on almost all lending in the financial services industry, this report has become even more important since it is usually the sole element used to choose the annual percentage rate (APR), grace period and other contractual obligations of the credit card or loan.
These businesses range from the big three credit reporting agencies, Experian, Equifax, TransUnion, to specialty credit reporting agencies that cater to specific clients including payday lenders, utility companies, casinos, landlords, medical service providers, and employers.
It also contains general information on how to build or improve credit history, and how to check for signs that identity theft has occurred.
In this country, individuals can obtain their credit reports free of charge by requesting them online or by mail.
Therefore, it is usually difficult for immigrants to obtain credit cards and mortgages until after they have worked in the new country with a stable income for several years.
Detailed account information, including payment history, credit limits, high and low balances, and any aggressive actions taken to recover overdue debts, are all reported regularly (usually monthly).
[11] Credit scoring is the process of using a proprietary mathematical algorithm to create a numerical value that describes an applicant's overall creditworthiness.
Scores, frequently based on numbers (ranging from 300–850 for consumers in the United States), statistically analyze a credit history, in comparison to other debtors, and gauge the magnitude of financial risk.
The three major consumer reporting agencies, Equifax, Experian and TransUnion all sell credit scores to lenders.
Fair Isaac is one of the major developers of credit scores used by these consumer reporting agencies.
[13][14] That is because, as stated above, a number of inquiries over a relatively short period of time can indicate the consumer is in a financially difficult situation.
In the United States, insurance, housing, and employment can be denied based on a negative credit rating.
A 2013 survey showed that employer credit checks on job seekers were preventing them from entering the workforce.
Results indicated at the time that one in four unemployed Americans have been required to go through a credit check when applying for a job.
The specific scores that fall within a lender's guidelines are most often not disclosed to the applicant due to competitive reasons.
In 2013, Equifax and TransUnion were fined $23.3 million by the Consumer Financial Protection Bureau (U.S.) for deceiving customers about the cost of their services.