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Things to Know About Credit! Scoring, Fraud and Errors.

July 27, 2023

Credit Fraud.

Federal Trade Commission data shows that consumers reported losing more than $5.8 billion to fraud in 2021, an increase of more than 70 percent over the previous year.


Consumer Reports did a survey of 6,000 volunteers and 34% of them found at least one error on their credit report.


All this plus the constant fake dupe emails we get have us feeling like our heads are on a swivel with all the fraud that’s happening. So. Much. Fraud. I started thinking about what credit scores actually are, how they’re used, and what we should do if something is strange.

What is a FICO Credit Score?

According to FICO, “A credit score tells lenders about your creditworthiness (how likely you are to pay back a loan based on your credit history). It is calculated using the information in your credit reports. FICO® Scores are the standard for credit scores—used by 90% of top lenders.”

It is important to make the distinction between a generic Credit Score and a FICO Credit Score. The 3-digit code that most lenders use is the Fair Isaac Corporation, or FICO. It is the industry standard.  Other companies use a different scoring system than FICO.

When you apply for any kind of credit like a credit card, car, or home loan, companies want to know what kind of risk they will take lending you money.


Let’s look at the scoring. Ratings are between the Excellent range of 800-850 all the way to the Poor range of 300-579. These scores tell the lender how likely you are to pay the loan back.

What's in Your Credit Score?

There are 5 sections to your score:

  • Payment History - Do you pay your bills on time?
  • Amounts Owed - Having a bunch of credit accounts does not necessarily mean you are a high-risk borrower. However, if you use a lot of your available credit, this may indicate that you are overextended—and banks can interpret this to mean that you are at a higher risk of default.
  • Length of Credit History - In general, longer credit history is positive for your FICO Scores, but is not required for a good credit score.
  • New Credit - Opening several credit accounts in a short amount of time represents a greater risk—especially for people who don't have a long credit history.
  • Credit Mix -  A mix of credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans.


How Often Should You Check Your FICO Score

At minimum once per year. In cases like Divorce or if you are planning on making a big purchase in the next few months, checking more frequently might be necessary.

Annual Credit Report.

Federal law requires each of the three nationwide consumer credit reporting companies - Equifax, Experian, and TransUnion - to give you a free credit report every 12 months if you ask for it.

According to their website, says: “During this period of economic uncertainty, managing your financial health is important. That's why Equifax, Experian, and TransUnion are continuing to offer free weekly online credit reports.”

What do you do if you suspect fraud or think someone is opening up credit in your name?

Go to The Federal Trade Commission has created a website that can help you create a personal recovery plan. They break it down in steps starting with what to do right away, what the next steps should be, steps for certain types of accounts, and specific forms for medical, child, or tax fraud.

What do you do if there are errors in your report?

The Federal Trade Commission is the first step. Please reference this website:

The FTC website has links to each of the credit reporting bureaus and their process of disputing a mistake. The site also has a sample letter you can use to draft, and the contact phone numbers for each of the bureaus.

I hope this information has been useful and as always, if you have any questions or feedback, please contact us.

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