Credit and Debt | Department of Financial Services



When you apply for a credit card, car loan, personal loan or mortgage, the lender will want to know your past history of borrowing in order to understand the risk they might be taking by lending you money. The status of your credit score will depend on how good you’ve been in the past at repaying your debts. A bad credit history can affect the credit that’s made available to you or even cause you to be denied credit completely. On the other hand, a healthy credit report and a high credit score can mean better financial options for you. To find out where you stand, a lender will go to a credit reporting agency to get your credit report.

Credit Reporting Agencies

Credit reporting agencies collect an individual’s financial information, compile it into a credit report and, for a fee, make it available to the individual and to other authorized parties, including financial institutions. Generally when you apply for a loan you give the lender permission to get a copy of your credit report. Companies that lend money rely on credit reporting agencies and the credit reports they generate to help them assess a customer’s ability to repay what they borrow.

Although there are many local and regional credit bureaus throughout the United States, most credit bureaus are either owned or under contract to the nation’s three major credit reporting agencies: Equifax, Experian (formerly TRW) and TransUnion.

Credit Report

A credit report is a detailed history of a person’s borrowing habits and consists of the following information:

  • Identifying information such as your name, past and present addresses, date of birth and employment history;
  • Credit accounts submitted by lenders who have extended credit to you. This includes the type of account (credit card, auto loan, mortgage, etc.), the date the account was opened, the credit limit or loan amount, the account balance and the payment history;
  • Inquiries on the account for the last two years including voluntary inquiries, when you apply for credit or a loan, and involuntary inquiries, when a lender you are not aware of orders your report to see if they want to make you a pre-approved credit offer;
  • Public record and collection items including information from state and county courts and collection agencies, and public record information like bankruptcies, foreclosures, lawsuits, wage attachments, liens and judgments.

Credit Score

When a lender gets your credit report, they can also generally get your credit score. A credit score is a mathematically calculated number based on the information in a credit report. By comparing this information to hundreds of thousands of other credit reports, credit reporting agencies come up with a number that can be used to identify your level of future credit risk.

Credit scores are often called “FICO scores” because most scores are produced from software developed by Fair Isaac Corporation also known as FICO. FICO scores range from 300 to 850 – the higher the score, the lower the risk. 

In order for a score to be calculated on your credit report, the report must contain at least one account which has been open for at least six months. The report must also contain at least one account that has been updated in the past six months. This ensures that there is enough recent information in your report on which to base a score.

Scores should be within a few points of each other. If they do differ by more than a few points it should be a red flag that something is wrong and should be further investigated.

Can different agencies have different scores?

There are three different FICO scores developed at each of the three different credit reporting agencies. FICO uses the same method to come up with each score, but the score at each of the three agencies may not be exactly the same because of the different ways lenders report information to the agencies. The FICO score from Equifax is called BEACON, the score from Experian is called the Experian Fair Isaac Risk Model and the score at TransUnion is known as EMPIRICA.

Is FICO the only credit score that lenders use?

No.  Many lenders use scoring systems that include the FICO score but may also consider other information in your credit application including the customer’s history with the institution. However, when purchasing a credit score for yourself, make sure to get the FICO score, as this is the score most lenders will look at in making credit decisions.

It is important to remember that no one piece of information or factor alone will determine your score and while lenders use scores to help them make lending decisions, every lender will have its own set of guidelines for a given credit product.

What does a FICO score take into consideration?

Your FICO score only looks at information in your credit report and considers both the positive and the negative information on the report including:

  • Payment History – (accounts for about 35%)
  • On-time payments on credit accounts including credit cards, retail accounts (such as department store credit cards), installment loans (loans where you make regular payments, like car loans) and mortgage loans. 
  • Late payments (delinquencies) on credit accounts including how late the payments were, how much was owed, how recently the late payments occurred and how many times payments were late.
  • Public record and collection items including delinquency payments on utility bills that are sent to collection agencies,  bankruptcies, foreclosures, lawsuits, wage attachments, liens and judgments. (Older items and items with small amounts will count less than recent items or those with larger amounts.)
  • Amount of credit – (accounts for about 30%)
  • The total amount owed on each account, in addition to the overall amount you owe.
  • Having balances on certain accounts. (Having a very small balance without missing a payment shows that you have managed credit responsibly, and may be slightly better than carrying no balance at all.)
  • The number of accounts that have balances. (A large number can indicate higher risk of over-extension.)

Length of Credit History – (accounts for about 15%)

  • The age of your oldest account and the average age of all of your accounts.
  • How long it has been since you used certain accounts.
  • New Credit – (accounts for about 10%)
  • How many new accounts you have or how long it has been since you opened a new account.
  • How many requests for credit you have made in the last 12 months.
  • How long it has been since a lender made a credit report inquiry.
  • Whether you have repaired your credit history, following past payment problems.
  • Types of Credit – (accounts for about 10%)
  • What type of credit accounts you have, and how many of each type.  This includes:
    • Revolving credit – American Express, Visa, MasterCard, Discover Card, and department store cards.
    • Installment credit – Personal loans, car loans, student loans and mortgages.

How Does the FICO Score Count Inquiries?

The FICO score counts inquiries or requests a lender makes for your credit report or score when you apply for credit. Too many inquiries can have a negative impact. Looking for a mortgage or an auto loan (rate shopping) may cause multiple lenders to request your credit report within a short period of time. The score counts multiple inquiries in any 14-day period as just one inquiry. The score also ignores all inquiries made in the 30 days prior to scoring. If you find a loan within 30 days, the inquiries won’t affect your score while you’re rate shopping. One credit inquiry will usually take less than five points off a score. Inquiries can have a greater impact if you have very few accounts or a short credit history.

What FICO Scores Do Not Look At:

  • Age, race, sex, religion, nationality, medical history, criminal history, and marital status.
  • Salary, occupation, title, employer, date employed or employment history.
  • Interest rates being charged on a particular credit card or account.
  • Support obligations, rental agreements or utility payments.
  • Requests you make, requests from employers, and requests lenders make without your knowledge.
  • Information that is not found in your credit report.

Tips on Improving Your Credit Score

  • Request and check your own credit report and your own FICO score once a year. This won’t affect your score, as long as you order your credit report directly from the credit reporting agency or FICO. While having credit cards and managing them responsibly can lead to a high credit score, having no credit cards can make you seem like a risk.
  • Keep your balances low or, if possible, pay them off completely each month.
  • Pay off debt instead of moving it around. Owing the same amount but having fewer open accounts may lower your score.
  • Don’t open credit cards that you don’t need just to increase your available credit or because you want it to look like you have a better mix of credit.
  • If you have only had credit for a short time, don’t open a lot of new accounts at the same time. New accounts will lower your average account age, which will affect your score if you don’t have a lot of other credit information.
  • Shop for auto or mortgage loan rates for within a set period of time. FICO scores distinguish between a search for a single loan and a search for many new credit lines by the length of time over which inquiries occur.
  • Don’t close credit cards to try to raise your score. Closed accounts show up on your credit report.
  • Repair your credit history if you have had problems. Open new accounts responsibly and pay the bills on time.


If you have been turned down for credit, the Equal Credit Opportunity Act (ECOA) gives you the right to find out why within 30 days. You are also entitled to a free copy of your credit bureau report within 60 days, which you can request from the credit reporting agencies.

When a lender receives your credit score, up to four “score reasons” are included. These will explain the reason for your score. If the lender rejects your request for credit, and your FICO score was part of the reason, these reasons can help the lender tell you why you were rejected and can help you determine how to improve your credit.

Disputing Errors

The Fair Credit Reporting Act requires that incomplete or incorrect information on your credit report must be corrected for free by the credit reporting agency. If you find an error and ask that it be corrected, the credit reporting agency has 30-45 days to investigate. Only inaccurate information may be removed from your credit report; negative information that is accurate will stay on your credit report as long as governing laws allow.

To submit a dispute:

  • Inform both the credit reporting agency and the company that supplied the information to the credit reporting agency that you believe your credit report contains inaccurate information. The best way to do this is by writing each of them a letter. If you don’t have the resources to write the letter, the credit reporting agency may be willing to help you.
  • In the letter, include your full name and address, the full name of the company that supplied the disputed item and the account number of the disputed item (from your credit report).
  • Include copies of any documents that support your position (credit card statement, court document, etc.).
  • Identify each item in the report that you dispute, explain why you dispute the information, and request deletion or correction. Enclose a copy of your report with the items in question circled or highlighted.
  • Keep copies of your dispute letter and any records you send along with it. Do not send original documents.
  • Send the letter by certified mail, return receipt requested.

The credit reporting agency will ask the party that generated the information for their records.  After the investigation you can expect the following from the credit reporting agency:

  • If the lender cannot find a record of the disputed information, the credit reporting agency should delete the information from your credit report.
  • If they find evidence that the information is inaccurate they will make a correction to your report or add any missing information and will usually mail you an updated copy of your report.
  • At your request, they will send a ‘notice of correction’ to any creditor who has checked your report in the last six months. 
  • The agency should also send the corrected information to the other credit reporting agencies, but you should confirm that this has been done by rechecking all of the reports.

If you feel that the credit reporting agency has not resolved your dispute you can add a statement to your report that explains your side of the story. The statement must be less than 100 words and will remain on your report for seven years. It will be sent to anyone who requests a copy of your report.

Free Credit Freezes

The three major credit reporting agencies are required by federal law to offer free credit freezes. A credit freeze (also called a security freeze) restricts access to your credit file, making it difficult or impossible for identity thieves or others to open an account or borrow money in your name using breached or stolen information.

A freeze also prevents lenders and creditors from accessing your credit files to review your history and, as a result, prevents new credit from being opened in your name, unless you authorize the credit reporting agencies to lift the freeze and allow access.

Parents and guardians of children under 16 years may also freeze a child’s credit file. The three major credit reporting agencies must offer free electronic credit monitoring services to active duty military personnel.

You will have to temporarily or permanently lift or “thaw” the freeze if you are applying for a loan or a credit card. Lifting a freeze is free. Many consumer advocates and security experts recommend credit freezes as one of the best ways to protect your credit information from fraud and prevent identity theft.

The procedures for obtaining a freeze are different for each of the three credit reporting agencies, and for a freeze to work you must place one with each of the three agencies. Consumers should visit their websites to learn more about how to freeze your file:

You can also call each agency (Equifax, 800-349-9960; Experian, 888-397-3742; TransUnion, 888-909-8872) to place the freeze.

Consumer Credit Reporting Agencies and Data Breaches

In response to a 2017 Equifax data breach, DFS issued a regulation that requires consumer credit reporting agencies register with DFS, comply with New York’s separate first-in-the-nation cybersecurity regulation, subjects the agencies to examinations by DFS, and prohibits them from engaging in certain conduct, including unfair, deceptive or abusive acts or practices, misrepresenting or omitting any material information in a credit report, or failing to comply with the provisions of federal law relating to the accuracy of the information in any consumer report.

For more information about credit freezes and other measures you can take to protect your credit files, visit the Federal Trade Commission’s Consumer Information Credit Freeze FAQs.

Free Annual Credit Report

You Are Entitled To A Free Copy Of Your Credit Report…

  • Once every year.
  • If you have been denied credit in the previous 60 days.
  • If you have been denied employment or insurance in the previous 60 days.
  • If you suspect someone has been fraudulently using your accounts or your identity.
  • If you are unemployed and plan on applying for employment within the next 60 days.
  • If you are on public assistance.

(You are entitled to get your credit score free of charge from your lender when applying for a mortgage.)

Request your free annual credit report from all three major agencies online at You can also call (877) 322-8228 to request your credit report by phone. You will go through a simple verification process over the phone and your reports will be mailed to you.


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