By Ellyn Ferguson
Gannett News Service

WASHINGTON - Qualifying for a loan, getting the lowest insurance rate and even landing a good job could be affected by a single number: your credit score.

"Credit scores are becoming the key to economic access," said Brad Scriber, co-author of a study on credit scoring by the Consumer Federation of America and the National Credit Reporting Association.

And the scores can be affected by things you do - failing to pay your bills on time, for example - and things beyond your control, such as inquiries made by companies trying to decide if they want to offer you credit.

Consumer advocates like Scriber say a piece of information so vital to people's lives should be available free at least once a year.

Bills in Congress would require the three national credit bureaus to provide upon request your credit report - the record of your financial transactions - once a year at no charge. But consumer groups say the legislation doesn't go far enough.

Neither version guarantees that the report will include your three-digit credit score, the number most often used by mortgage companies, banks, insurers and landlords to judge someone's credit worthiness. The bills also don't address how insurance companies use the scores.

And consumer groups fear that a provision in the House bill would prevent states from being tougher than the federal government in regulating the use of credit scores.

Your scores can vary

The basic credit score is based on a person's credit report and computed using mathematical models. Insurance and mortgage scores are variations of a person's credit score.

As a result, Scriber said, "The same person can generate different numbers."

Credit industry officials say the scores are scientifically based and good predictors of how people will handle debt.

"Scores provide a wonderful distillation of the credit decision-making process," said Craig H. Watts, spokesman for the consumer division of Fair Isaac Corp., which sells scoring software to credit bureaus. The California-based company so dominates the field that its score - called FICO - is synonymous with credit scores.

The exact formula is secret because of fierce competition in the industry, Watts said. That secrecy, he acknowledged, "contributes to an air of suspicion" with consumers.

Consumers can get their credit score now, if they're willing to pay for it. The three major credit bureaus - Equifax, Experian and Trans Union - each charge at least $12.75 for a credit report with scores.

Lenders must tell consumers when poor credit scores result in their being charged higher interest rates or denied credit. However, lenders don't have to show a consumer the score.

Scriber of the Consumer Federation of America says people should get a free score, not just the report, and an explanation of what the numbers mean before there's a problem.

Don Tonack, a former insurance underwriter and retired Lutheran minister, likes the idea of free credit scores and wants closer government scrutiny of how scores are used.

Tonack, who lives in Oregon's Willamette Valley, considers his credit history irrelevant when it comes to determining his insurance rates. But he found out last year that the insurance industry thinks otherwise and uses its own version of the credit score to set premiums.

Because of the score, his car insurer of 17 years told him he would not get the most favorable rate. An angry Tonack wrote the company and state officials noting that he had no debt and that he and his wife had had clean driving records for 40 years.

"What the insurance companies are doing is discriminating against two groups: those who have no need to borrow and young people who are trying to establish their credit," Tonack said.

He'd like to see state and federal lawmakers work together to police the use of insurance scores.

But Congress isn't addressing this area.

The right to regulate

The legislation pending in Congress, a renewal of the Fair Credit Reporting Act, deals primarily with the use of credit scores by mortgage companies and banks.

Gary Karr, a spokesman for the American Insurance Association, said his group supports the House bill in particular "because it keeps the rules (on insurance scores) now in force. The states still have the right to regulate the use (of insurance scores). They can't prohibit them."

Consumer groups and state lawmakers look at the House bill with concern because it could make it impossible for states to impose stricter laws than the federal government on scores used for mortgages and other credit purposes.

Six states - Colorado, Georgia, Maryland, Massachusetts, New Jersey and Vermont - already require the three national credit agencies to provide one free credit report a year to consumers who request one.

California gives consumers the right to a free look at their credit score when it's used for a mortgage.

" The credit and financial industries say limiting states' ability to create new rules on credit scores will set a uniform, national approach.

In Congress, Rep. Bob Ney, R-Ohio, echoed that argument when he successfully offered an amendment to the House to keep states from creating tougher regulations in the future on how credit scores are used.

"If we are not careful," Ney said, "consumers could end up getting multiple disclosures with different numbers, explanations and forms that are highly confusing and even contradictory.

Do's and don'ts

How can you protect your good name and your good credit? Nothing's foolproof, but here are some basic rules to follow.

Do ...

•  Be consistent in using your full legal name when applying for credit. This will reduce the likelihood that someone else's credit history will wind up in your records.

•  Pay your bills on time. Some late payments such as mortgage or car notes are more damaging than others. If a debt goes to a collection agency, it stays on your record for seven years after you've paid it.

•  Keep your balances low on credit cards and other revolving credit accounts.

•  Make it an annual habit to review your credit report and credit score held by each of the three national credit-reporting agencies. If you find any errors, contact the agency that supplied the report and challenge the data.

•  If a lender says you have bad credit, ask for specifics. Current law does not require lenders to tell you why your credit is bad or to show you the credit report they used, but press for details anyway.

•  If you can't get complaints about your credit report resolved quickly, call the Federal Trade Commission toll-free at (877) 382-4357 or go to www.ftc.gov.

Don't ...

•  Don't get credit cards you don't need just because you want to increase your available credit.

•  Don't open a lot of credit accounts in a short time if you're just starting to build a credit history. A rapid buildup in accounts can cost you points.

To know

•  If you have a bad credit history, you can rebuild it slowly by opening new accounts and handling them responsibly.

•  If you have no credit cards or other credit track record, you are often considered a higher credit risk because there is no record of you managing credit responsibly.

•  Closing an account does not remove it from your credit report. It may be included in the score.

To check your credit

Costs for a report and/or credit score start at $12.75. If you've been denied credit or employment within the last 60 days, you may qualify for a free report. If you're on welfare or receiving unemployment benefits or are a victim of identity theft, you also can get a free report.

If you decide to write the major credit agencies, include your first, middle and last name, date of birth, Social Security number, most recent addresses and two proofs of your current address.

Equifax
P.O. Box 105851
Atlanta, Ga. 30348
(800) 685-1111
www.equifax.com

Experian
P.O. Box 2002
Allen, Texas 75013
(888) 397-3742
www.experian.com

Trans Union
P.O. Box 1000
Chester, Pa. 19022
(800) 888-4213
www.transunion.com
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Sources: Consumer Federation of America and Fair Isaac Corp.