FreeCreditReport.com is a website that offers “your free credit score and a whole lot more.” They offer the opportunity to a “free credit report” but by doing so you have to agree “to begin your free trial membership in Triple Advantage Credit Monitoring.”  It is very important to note if you don’t “cancel your membership within the 7 day trial period” they will bill you $14.95 per month to continue your membership.  

FreeCreditReport.com touts itself as different from other websites that offer similar services by stating their report is “easy to understand,” “delivered quickly, safely, and securely with 24 hour access,” and they “alert you of key changes to all 3 of your national credit reports.” Please note there are asterisks and disclosures attached to many of these statements.  

Additionally, the website offers access to your Experian credit report and credit score without signing up for membership for $14.95 or “3 credit reports & 3 scores in seconds, all of your credit reports in one” for $39.95.

FreeCreditReport.com goes on to advise they are not affiliated with the annual free credit report program. They state “under federal law, you have the right to receive a free copy of your credit report once every 12 months from each of the three nationwide credit reporting companies.”  They direct you to a different website for information about this program. However, they include the reminder that “all free credit reports are not created equal.”  

FreeCreditReport.com certainly offers a valuable service as each person should keep track of their credit report information regularly.  However, please remember it is important to review all disclosures and small print carefully before giving anyone your personal information.  

A borrower has a FICO score of 580 out of a possible 850. 

Melvyn Brooks has recently lost his job as a vehicle mechanic and has run into some financial problems.  His rented house in Newark is quite expensive to run and he has some outstanding debts.  His credit score is currently 580.

This score would be considered Poor on this scale, with Very Good being the highest rating. A number of variables affect the credit score, but with 580, the borrower would be considered a very high risk by lending institutions. The conclusion would be that Melvyn has had major debt issues in the past and has not always made his repayments on time. Lenders will not want to provide credit or loans to Melvyn until a more positive credit history has been established by him.

As a result of this credit score it would be difficult for the borrower to obtain any attractive offers from lenders, especially the credit card companies. Melvyn would have to pay enhanced fees and higher interest rates than many other customers. Larger down payments on installment loans and any mortgage would also be asked for by the companies. In addition he might not be able to obtain high credit limits or any loans at all.

The variables keeping this score in the lowest category are many late payments across a variety of accounts, including credit cards, mortgages and other installment loans. The fact that any late payments were very recent is extremely relevant. Charge-offs on accounts (in which the lender did not receive the entire owed balance) is a very negative consequence.  Finally, this borrower will have a public record and settlement showing on the credit report. This informs lenders that the borrower had been taken to court to collect on a debt.  

The borrower will need to re-establish some proven good spending behavior on existing accounts and allow time to eliminate some of the more negative entries beyond a period of as long as seven years.  

A borrower has a FICO score of 610 out of a possible 850. 

David McNish is a fisherman working out of Gloucester, Massachusetts.  His income can be very variable due to his line of work but he earns a reasonable living to support himself and his wife.  They do not have an ostentatious lifestyle but a comfortable standard of living. His credit score is at present 610.

This score would be considered as Fair in this scale, where Very Good is the highest rating. A number of variables will affect the credit score. With 635, this borrower would be considered a medium to high risk by lending institutions that might conclude the borrower has had some major issues in the past and has not always adopted the best behavior when repaying outstanding loans. David has had odd periods when his income has dipped considerably and his repayments weren’t always on time.  

As a result of this credit score it would be difficult for the borrower to obtain the most attractive offers from lenders; the credit card companies particularly. A customer with this score will always have to pay higher fees and David would be no exception. The interest rates would be a bit higher than normal and he might have to make larger down payments on mortgages and any smaller unsecured loans. In addition, he may not be able to obtain high credit limits on cards or the loan amounts that he might need.

The most relevant factors affecting the score from this borrower’s credit report is the payment history. David is already servicing a substantial amount of debt, on which payments will have been missed on multiple accounts. Any prospective lender is going to seriously consider any future dealings with this borrower, as the possible costs of collecting debts will be much higher than a customer with a higher score. The borrower might also have a bankruptcy entry on their credit report and this information will stay on record for 10 years. 

Finally, the average age of the accounts in this report is seven years, which is at the lower limit for establishing a credit history and will be driving the score down. On the positive side, the borrower is not averaging more than 70% debt versus credit limit, which means David is not spending beyond his means.

A borrower has a FICO score of 635 out of a possible 850. 

Pamela Bowes is a hairstylist living and working in Oregon. She has her own house which she inherited from her parents and enjoys her independence now that she is divorced.  Her credit score is 635.

A score of this level is considered Fair on this scale, where Very Good is the highest rating.  A number of variables affect the credit score, but with 635, Pamela would be considered to be a medium risk by the lending institutions. The conclusion would be that she has had some issues in the past and had not always adopted the expected behavior during the course of repaying loans (probably during the divorce). 

As a result of this credit score, it would be difficult for this borrower to obtain the best offers/rates from lenders, especially the credit card companies. Pamela would probably have to pay somewhat higher fees and interest rates and may have to make larger down payments on installment loans and mortgages. In addition, she may not be granted very high credit limits or allowed larger loan amounts.

The positive factors on this credit report could still indicate 100% on-time repayments, but some poor recent behavior. Missing a single payment on one account rather than many or on an account with a very low balance does not significantly lower the credit score. However, with consistent on time payments, lenders will believe you are responsible enough to repay your loans. Also, having several revolving accounts helps raise the score, since a history is then established.  

The negative factors driving the score down include having: at least one collection account or negative public record, older and more frequent missed payments on several accounts and having all accounts in the report established for a period of less than three years.  

If a borrower has a FICO score of 735 out of a possible 850. 

Peter Roberts is a qualified osteopath living and working in Maine.  He is married with three children and earns a reliable income from his practice. His credit score is 735.

This score is considered Good in this scale, where Very Good is the highest rating. A number of variables affect the score, but with 735, Peter would be considered a low risk by the lending institutions, concluding that he is capable of repaying debts consistently and on time. Any negative remarks in the credit report would have little impact on the score. This borrower would be offered lower interest rates and better terms than those with lower scores. The final overall terms of any credit or loan offering would also be dependent on the monthly income, monthly debt and Peter’s employment history.

There are a few areas of improvement that would help raise the score. Firstly, there is not enough revolving debt experience, so adding a variety of account types and demonstrating good payment behavior will help. Secondly, there could be too many delinquent accounts on the credit report, when compared to the total number of accounts. It is important to establish creditworthiness through consistent and established on-time payments.  

Thirdly, the balances on this borrower’s bankcard accounts are too high in comparison with their credit limits. It is advisable to either raise the limits via a request to the lending institution in order to improve the ratio or repay existing balances away from the limit. 

Finally, there could be recent late payments posted on the credit report. Having one or two late payments, compared with dozens of on-time ones has some, but not a hugely significant impact on the credit score. However, credit worthiness is based on no late payments, so it is important that Peter maintains good paying practices.