Check your own credit score

People will have free access to the credit scores being allocated to them by credit reporting agency Veda Advantage.

Veda has caused a stir by announcing that from next month every New Zealander on its books will have a credit score from minus 330 through to plus 1000.

A person with a score of less than 100 will have difficulty obtaining credit, 500 to 600 will be average, and anyone with a score of 700 and above will be considered a good credit risk.

The information will be based on their existing credit profiles, and under the law anyone can ask for a free copy of their file annually. From August 2 this will include the new scores.

John Roberts, Veda's New Zealand and international managing director, emphasised the only new factor built into the scoring system was an automatic driver's licence check to help counter rising levels of identity fraud.

But he said the system had been set up in anticipation of a move to what is known as positive or comprehensive credit reporting, whereby fuller details of a person's financial circumstances can be accessed by potential creditors.

At the moment only "negative" information is available, such as whether the person has ever defaulted on bill payments or been bankrupted.

The Office of the Privacy Commissioner is conducting a review into whether this country should move to positive reporting.

New Zealand and Australia are two of the few countries worldwide to retain a negative system.

Mr Roberts said negative reporting was an "archaic" system that penalised people if they had made the odd mistake. "What we're trying to do is drag [the system] kicking and screaming into the 21st century."

The national president of the Credit and Finance Institute, David Young, said the credit market had taken a battering of late and anything that gave people confidence to extend credit was a good thing.

He said that whereas large organisations had their own credit-scoring systems, small business operators did not necessarily have the skills to make an accurate assessment of someone's creditworthiness based on the raw data. "What they're getting here is a tool that will enable them to do that assessment."

For example, he had recently looked at a credit report where the person had five district court judgments against them, had defaulted 25 times and had applied for credit 32 times in the past two years. "There's a whole raft of information that I can interpret out of that quickly and decisively."

But John Scott, New Zealand head of rival reporting agency Dun & Bradstreet, said he did not see the commercial advantage of a consumer credit score.

Few small businesses extended credit directly to consumers.

He said what was more important was the quality of the data being fed into any credit reporting model.

Dun & Bradstreet supported an initial limited move to positive reporting, allowing information such as whether previous applications for credit had been approved, who the lender was and the extent of the credit.

Overseas credit reports contained details about a person's income, the size of their mortgages and credit card balances, but New Zealanders were "not ready to go all that way".

"No other other country apart from Colombia has moved from a negative to a full positive file."

Consumer magazine editor-in-chief David Naulls said the Consumers Institute did not have a problem with the new scoring system because it was based on existing information.

It cautiously supported a move to positive credit reporting because it could potentially bring costs down as financial institutions were able to make better lending decisions.

It might also aid those without much of a credit history. "Groups who haven't always accessed credit might find it easier in a positive system."

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Higher Credit Scores Needed to Qualify for Premium Interest Rates

SpendOnLife has partnered with MyCreditHealth to ease the hassle for consumers needing a free credit score from each of the three credit bureaus.

Experts say nothing less than a score of 760 will ensure getting the premium interest rates on credit lines and loans. Someone with a lesser credit score may still qualify for a loan, but likely won't get the best deal. Due to low interest rates being reserved only for those with the highest credit scores, consumers need to track their credit history and monitor their score before approaching lenders.

SpendOnLife's partnership with MyCreditHealth introduces consumers to an around-the-clock credit monitoring service that allows them to access their latest credit reports and credit scores from all three credit bureaus - TransUnion, Equifax, and Experian. 3-in-1 credit reporting offers the most comprehensive view of one's credit in an easy-to-read format and consumers can clearly spot errors or unauthorized activity on all of their reports in one central location.

Members of MyCreditHealth's service are also eligible for key features including assistance in resolving inaccuracies on their reports from personal dispute specialists.
An alert program that sends members a warning when unusual or negative changes post to their credit report, like a delinquency or address change, also proves to be a vital part of the monitoring process. These notifications assist in preventing identity theft, which could severely hinder progress toward improving one's credit score.

The score tracker gives members a useful visual of their credit score progress month after month. The tracker plots all three bureau scores on an easy-to-read chart for simple tracking. By providing a continuous birds-eye view of members' reports and scores, MyCreditHealth helps consumers see if they are headed in the right direction in reaching their credit goals.

SpendOnLife.com (http://www.spendonlife.com) is an online resource that offers the educational materials and tools needed to achieve healthy credit and prevent identity theft. SpendOnLife.com makes it easy to get your credit reports and scores, and offers credit monitoring services. Our goal is to help consumers understand their credit and the dangers of identity theft.

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Five Points to Fixing Your Credit

A couple of months ago a friend was telling me about some financial difficulty with their business and remarked how fortunate they were to have their credit line on their home available for backup. I advised them to check with their bank to make sure their credit line was still available. Unfortunately, I was correct because their credit line had been closed without their knowledge.

Another client called to ask about buying a home and when I asked about their credit history they said they were trying to pay down some credit cards only to find that once the amount due was paid the bank reduced their limit.

The first basic in credit scoring is to understand what the numbers mean. FICO or the Fair Isaac Corporation is the company that for the past 53 years has offered a measurable number by which creditors can determine your credit worthiness. Credit scores range between 200 and 800. Scores above 720 are considered desirable for obtaining a mortgage. They have determined five main factors will affect your score…things you ultimately have control over.

1. Your payment history. Whether you paid credit card obligations on time.

2. How much you owe. Owing a great deal of money on numerous accounts can indicate that you are overextended.

3. The length of your credit history. In general, the longer the better.

4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay promptly.

5. The types of credit you use. Generally, it’s desirable to have more than one type of credit—installment loans, credit cards, and a mortgage, for example.

There are some variations on the theme but the basics itemize your scores and more importantly indicate how you can improve your scores, which in turn, improves your life.

I spoke with Linda Ferrari who has a FREE ebooklet called: “Save Your Credit, Save Your Life” which is a 10 step action plan to help clean up your credit. She offers great advise starting out with only ordering your credit report when you visit the various agency websites. Apparently even the credit agencies are trying to sell additional services that you may not need. Another point she makes is that everyone is entitled to one FREE credit report each year and to be sure you order only from www.annualcreditreport.com …all other sites offer paid services so don’t be fooled.

Another option is to pay a credit repair company to “scrub” your credit. Typically this is done once you have a complete copy of your credit report from the three main agencies: Experian, TransUnion and Equifax. Thoroughly examine your report, line by line, and be ready to prove any incorrect information. Once you challenge any information they are required by law to look into and correct anything false. If you find you are having trouble this is where a credit repair service can come in handy.

First time buyers need to understand that they didn’t get into their situation overnight and it might take just as long to correct the situation so don’t despair. There is gold in those hills and it’s in the form of tax credits BUT they are due to expire Nov 30th 2009 so NOW is crunch time. Making the effort to improve your credit will pay big dividends and could ultimately result in home ownership…don’t let this market pass you by.

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Legitimately improving your credit score solo

flIn this economy more businesses are offering ways to improve your credit score, but are they just a waste of your money?
Payment history, and how much you owe creditors represents 65% of how your credit score is determined. And while paying a local agency to fix your problem may seem like a quick solution, one local couple is out hundreds of dollars and still in the credit hole.
Since 2002, the Moore’s of Kinston have faced credit problem after credit problem—chapter 13 bankruptcy—unpaid medical bills—-and past due loan payments.
So they gave a local credit correction agency $1200 to pull their credit score up—it didn’t work.
Rich Hutson, vice president of State Employees’ Credit Union in Greenville says the Moore’s should have kept their $1200 and invested time getting their hands on their credit report.
The Moore’s credit report is long. Hutson says they should go through it, page after page, find the items they believe are inaccurate and dispute it in writing, “You have to provide the proof that the bill is unjust and that they’re reporting it incorrectly.“
The consumer reporting agencies Equifax, Experian and Trans Union must investigate each item in question within 30 days. But Hutson warns, things like bankruptcies will stay on that report for a decade no matter what, so don’t be fooled by companies that advertise they can remove it.
Hutson adds, “They can’t erase any of that information…It’s going to save you a lot of money in the long run by making sure you’re paying everything on time and you credit score will reflect that.“
Hutson says if your credit score is below 620 you’re in trouble. Even if you have an average score of around 640—you should still review your credit report regularly. Identity thieves could be charging items on your credit without your knowledge. A 90-day late fee could stay on your credit report for 7-years.

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Answering Reader Questions on Credit Reports

Wallet readers recently wrote in wanting to know more about all things credit-related. They asked savvy questions about what information is put on a credit report–and for how long–and what factors can hurt or help your credit score. We did a little digging on your behalf. Here is what we learned:

One reader wanted to know how long one’s employment history stays on a credit report. The short answer: Don’t worry about it. Employment history, which is sometimes included in the identification section of a credit report, “doesn’t count in your credit score and doesn’t have a negative effect on your credit at all,” says John Ulzheimer, president of consumer education at Credit.com.

In fact, most consumers have outdated employment information on their credit reports, says Norm Magnuson of the Consumer Data Industry Association, a trade group for the credit-reporting industry. If having the information on there is bugging you, you should contact each of the three national credit reporting agencies (TransUnion, Equifax and Experian) to have employment information removed, says Ulzheimer.

Readers also wanted to know how long it takes for your credit report to reflect recently paid-off credit-card balances. Any payments made to your credit card should show up on your credit report within 30 days. Credit-card issuers send updates to the credit bureaus once a month, so depending on when you made the payment, it could take a few days or a full month before the lower balance shows up on your credit report.

Another reader asked how going over your credit-card limit affects your credit score. Credit bureaus look at how much of your available credit is being used up when they calculate your credit score–and going over the limit on a credit card will give you a high debt-to-credit ratio, which can ding your score. “And that can lead your other lenders to take actions like lowering limits, increasing your interest rate, increasing your minimum payment requirement or closing the account down completely,” says Ulzheimer.

The experts advise avoiding this situation by being conservative with credit-card use and making timely payments. If you happen to go over the limit accidentally, you might be able to minimize the damage if you immediately pay down the balance before the credit-card issuer sends an update to the credit reporting agency. But this is a risky gambit that you’re likely to lose.

Remember, you’re entitled to see your credit report–the blueprint for your credit score–once a year at no cost from each of the credit-reporting agencies. You can order a free credit report at AnnualCreditReport.com.

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Consumers Find Not All Credit Scores Created Equal

Not all credit scores are created equal. That's what a consumer found out when she started asking questions about why her credit card interest was more than doubled.

Maria Polk carries debt on her credit card but makes regular payments. So she was surprised to find her Bank of America credit card jumped from 12% to 30% in one billing cycle.

"I had no idea what happened. I was never late on any payments. I thought I had excellent credit," Polk said.

She pulled up her VantageScore credit score from Experian to see what was wrong.

"My credit score was 853 and I thought, 'Wow, that's pretty good,'" Polk said. "So why am I getting 30% interest rate on my credit card?"

It didn't make sense, so she applied for another credit card at a different bank – Wachovia – hoping she'd get a better deal so she could transfer her balance.

"So I got my credit card from the bank and it was a credit limit of $3,500 and I thought, 'Well, there's not much I can do with that,'" Polk said.

Wachovia told her they based that low limit on a different credit score; a much lower 664, which was her FICO score.

"Why can't they get the score together? Why can't we really understand the score? Why isn't there a formula that the average person can understand?" Polk said.

Rick Harper with the Consumer Credit Counseling Service of San Francisco explained there are different credit scoring models.

"For instance, different creditors, automobile dealers, dealerships, might have their own credit score. The bureaus themselves, the three, have proprietary scores, and there may be more," Harper said.

He says different services also have their own scoring scales and criteria.

-FICO scores range between 300 and 850 points; Experian's VantageScore goes from 501 to 990.

-The length of your credit history makes up 15% of your FICO score and 23% of your VantageScore.

-And your amount of debt makes up 30% of your FICO score and 15% of your VantageScore.

Harper said what is dragging down scores during the recession is consumers carrying higher card balances, opening more lines of credit and transferring balances. He also explained credit scores are only a snapshot in time and they can change in a matter of hours as accounts get updated.

Harper's advice as the best way to monitor credit is to pull up a free annual credit report and make sure everything on it is correct.

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Consumer shopping bag: Credit scores

Q: Does stuff fall off credit reports with time? How long for a score to become good? What hints do you have to move forward and what should I avoid?— Kim W. and Paul P., Denver

A: Credit scores — and by that I mean the FICO score we're all familiar with, though there are many others — are an interesting animal in that they don't actually exist.

They are not sitting in a file somewhere, ebbing and flowing daily with each financial transaction you make. A FICO score only exists when there's a request for it. At that moment, a score is generated and is a snapshot of your credit history.

Though the snapshot is of the moment, the history goes back much farther — sometimes for 20 years.

The basic timeline for most all adverse credit issues is seven years. Chapter 13 bankruptcies, where you pay back some of your debts in time, are there that long, and pretty much all other debts.

Other than a Chapter 7 bankruptcy that lasts 10 years on your credit report, the longest is a tax debt from the Internal Revenue Service. Those are timeless.

Collection accounts last seven years and six months from the date you first fell behind on the original indebtedness — not when the collection agency took charge of your account.

But as debts get older, they fall away in importance to your credit score. So while a 30-days-late issue can be reported for seven years, in time it is less and less critical to your score.

Here's a tip: You can challenge anything on your report for accuracy or completeness. Challenge long-standing issues long resolved — such as a collected account from four years ago — and often times the collector won't bother responding to the bureau's inquiry. In such case the bureau must remove it from your report.

Paying on time is critical and today 750 is the new 720 for excellent credit. Build a good payment history and the old stuff won't matter so much.

Too, experts say outstanding balances shouldn't be any more than 10 percent of your available credit.

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Cheaper Mortgages Trigger Lower FICO Scores for On-Time Payers

July 17 (Bloomberg) -- Victor Stern thought his money troubles were over when he got approval to modify his home loan. Then his credit score dropped 121 points.

Stern, a business development director at an information technology company in Charlotte, North Carolina, said he was shocked to see his credit score drop to 619 from 740 after entering the trial period for a loan adjustment under President Barack Obama’s Home Affordable Modification Program. A salary reduction caused him to seek a change in the terms of his loan before he missed any payments.

Banks, including Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp., report the loan modifications to credit bureaus. The adjustments can lower credit scores because of the way the FICO formula, the most widely used by U.S. lenders, works.

“There should be clear disclosures so consumers understand this is a major hit on the credit score,” said Evan Hendricks, Washington-based author of “Credit Scores & Credit Reports.” “There’s no sugar-coating the reality of the negative impact.”

The Home Affordable Modification Program began in March to reduce mortgage payments for those who are delinquent or in danger of defaulting. The lower-cost loans are subject to a three-month trial period, meaning data for the completed number of modifications under the program is still pending. Existing modification programs have not been very effective and have fallen short of goals, said Senator Richard Shelby, a Republican from Alabama, at a hearing on the housing programs in Washington yesterday.

Almost 2 million loans have been modified since 2007, according to the Hope Now coalition of servicers, investors and counselors in Washington.

Limit Modifications

Borrowers might decide against participating when they learn what the program can do to their credit scores, said Jack Guttentag, founder of the Web site mtgprofessor.com and professor of finance emeritus at the University of Pennsylvania’s Wharton School. That could limit the number of modifications and result in more foreclosures, Guttentag said.

More than 1.5 million properties received a default or auction notice or were seized by banks in the six months through June, RealtyTrac Inc. in Irvine, California, said yesterday in a statement. That’s a 15 percent increase from a year earlier.

Scores based on models established by Minneapolis-based FICO, formerly known as Fair Isaac Corp., are used to gauge a consumer’s financial health. The numbers, which range from 300 to 850, affect the ability to get mortgages, credit cards and insurance products, as well as the rates borrowers pay for them. A FICO score of 740 is generally needed for the best mortgage rates, according to Liz Pulliam Weston, author of “Your Credit Score.”

‘Behind Eight Ball’

“We view an account that has been settled or renegotiated for less than the full amount as a negative because historically consumers on reduced payment plans represent a greater risk,” said Ethan Dornhelm, a principal scientist at FICO’s San Rafael, California, office. The size of the impact may be more for borrowers with higher credit scores, he said.

“My FICO score and ability to get credit is in danger,” said Stern, 64. The limit on his credit card, which he relies on for business purposes, was slashed to $500 from $15,000. “This program is helping with payments on one side, but then hurting your credit on the other, so you wind up behind the eight ball.”

Stern declined to say which lender he used because he doesn’t want to jeopardize his reduced payment plan.

CDIA Rules

The Consumer Data Industry Association, which represents credit bureaus, has guidelines for lenders to follow when reporting loan adjustments. Mortgage investors Fannie Mae and Freddie Mac adhere to CDIA rules, which state that homeowners in the trial period should be reported as current and on partial payment plans if they are not delinquent with payments.

When homeowners fall at least 30 days behind on a mortgage payment, they should be listed as delinquent until the account is current, said Norm Magnuson, a spokesman for the Washington- based trade group. A new classification will be created in November that specifies a borrower received a loan modified under a federal government plan.

FICO may study whether penalizing borrowers for loan workouts is still valid as more changes are completed under the Obama administration’s housing plan, Dornhelm said.

Borrower’s Obligation

Lending institutions may offer their own loan workout programs that extend the life of the loan, lower the interest rate or reduce the principal amount owed and report those new terms in different ways to the credit-reporting firms, said Jesse Keenan, an adjunct professor of housing law and policy at the University of Miami School of Law.

St. Louis-based CitiMortgage and Bank of America in Charlotte, North Carolina, said they report loan modifications in compliance with CDIA guidelines. JPMorgan Chase, based in New York, follows the guidelines yet needs software updates to report the special condition, according to spokesman Tom Kelly.

“If you’re a lender, you want to know that a borrower had to have a loan modified to keep up with payments,” said Greg McBride, senior financial analyst at Bankrate.com, who is based in North Palm Beach, Florida. “It’s not unfair that a loan modification impacts a credit score since the borrower didn’t meet the original obligation.”

200-Point Dip

A loan modification won’t slash a credit score as much as a foreclosure will, according to Gerri Detweiler, a credit adviser for San Francisco-based Credit.com. A foreclosure stays on a credit report for seven years and may cause a dip of 200 points for borrowers with high credit scores, said Dornhelm of FICO.

Consumers who are considering loan workouts should know the exact terms of their agreements, including whether there is a permanent or temporary reduction in the monthly payments, said Barry Zigas, director of housing policy at the Consumer Federation of America in Washington.

They should also ask their lenders whether they are obtaining modifications through the government program or the bank’s proprietary program, and how the changes will be reported to the credit bureaus, Zigas said.

“Homeowners need to focus on the mountain, not the molehill,” said McBride, the Bankrate analyst. “They get to stay in their homes and can always try to repair their credit scores.”

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9 Ways to Salvage an Ailing Credit Score

Without even contacting a credit bureau, Jeana Reed has a pretty good sense of what her credit score is. "It's probably the worst they've ever seen," says Reed, a 51-year-old Texan. Like many Americans, Reed's current credit headaches can be traced to a hospital stay. After her husband blew out his knee playing softball, complications from the injury kept him out of work longer than expected, which forced the couple to use credit cards to pay off medical bills. A job loss and a subprime mortgage refinancing later, the Reeds find themselves among the scores of Americans struggling to rebuild a soiled credit history. "I just want to get back on track," Reed says. "I'm not a deadbeat person."


Poor credit has always been a drag on household finances, as unpaid bills and late payments can lower a consumer's FICO score—the 300-to-850-point gauge lenders use to evaluate the risk that a borrower will default. Lower FICO scores can trigger higher interest rates on everything from credit cards to car loans. But recently, they've become more important to the real estate market. Just a few years ago, Fannie Mae and Freddie Mac used FICO scores primarily in deciding whether to approve a loan application. "That all changed as the market started to deteriorate and [Fannie and Freddie] were looking to fine-tune their mortgage pricing from a risk-based perspective," says Rick Allen, director of strategic initiatives for Mortgage Marvel, an online mortgage shopping website. Today, the mortgage finance giants use credit scores to determine mortgage costs too, jacking up fees on consumers with lower credit scores to compensate for their higher risk of default.


[Read about America's 10 Best Undervalued Places to Live.]


For would-be home buyers, this change has had powerful ramifications. With home prices declining and 30-year, fixed mortgage rates hitting near-record lows of less than 5 percent, the real estate market is offering plenty of incentives to jump in. But only borrowers who meet today's tighter credit standards—which include a FICO score of around 720, a down payment of at least 3.5 percent, and documented income verification—can get the lowest cost of financing. For example, a lender operating under Fannie Mae's pricing structure would charge a borrower who has a FICO score of 695 and a 15 percent down payment $3,000 in extra fees on a $300,000 mortgage. A borrower with a 720 FICO score, meanwhile, wouldn't pay any of those fees on the same loan. "FICOs are everything," says Chris Freemott, president of mortgage lender All American Mortgage in Naperville, Ill.


But whether you are deep in the weeds or just looking to get the best deal on a home loan, it's never too late to improve your credit. To help consumers reduce their mortgage financing costs, U.S. News gleaned tips from a handful of experts on boosting your credit score.


1. Get your credit report: The first step for improving your credit profile is to find out where your credit currently stands. Three main credit reporting bureaus—TransUnion, Equifax, and Experian—collect and compile payment information on individuals from tens of thousands of credit grantors, such as banks, credit card issuers, and retailers. "If you are about to buy a house ... then I want you to get all three credit reports," says Gail Cunningham of the National Foundation for Credit Counseling. "I never want to end up sitting across the desk from someone who knows more about me than I do." By law, consumers are entitled to one free credit report from each of these bureaus during any 12-month period. The free reports are available at AnnualCreditReport.com.


2. Get your FICO score: The FICO company created the formula that credit bureaus use to generate a FICO score. Every consumer's FICO scores are calculated from data from each of the three main credit bureaus. The scores take into account your payment history, the amounts you owe, your length of credit history, your new credit, and the types of credit you have used, says Shon Dellinger, vice president of myFICO.com for FICO. After getting your credit reports, Cunningham recommends obtaining your credit scores. A single FICO score can be purchased at myFICO.com for about $16. (FICO scores from Experian are no longer available through myFICO.com. Instead, Experian scores can be obtained through Experian.com or AnnualCreditReport.com.)


3. Study and check: Everyone—including the major credit bureaus—makes mistakes. But when it comes to credit scores, it's the consumer who pays for such screw-ups through higher interest rates. As a result, consumers need to ensure that everything included in their credit history is accurate by thoroughly examining their credit reports. "If you are a junior and your father is a senior who's got rotten credit habits, make sure that your report is distinguished from his," Cunningham says. Since a mistake may appear on one credit report but not another, it's best to examine all three of your reports. If you discover any incorrect material, contact the appropriate credit bureau for information about filing a dispute.

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Can asking for an increase in my limit hurt my credit score?

What goes into evaluating your credit score can be confusing. Everything from the length of your credit history, to your debt-to-credit ratio, to how many times your credit report has been pulled by credit issuers can be taken into account in the determination of your score. If you want advice on how to better handle credit, members of the Financial Planning Association of Greater Indiana may be able to help you. You can visit their Web site at www.fpagrindiana.org.
Penny C. Lutocka, London Witte & Co.

Your credit score is a tool used by lenders to evaluate your credit report and estimate your credit risk.
Advertisement

A high credit score allows you to borrow money at the best rate.

Asking for an increase in your credit limit will not hurt your credit score for the short term.

It actually will lower your credit-utilization ratio -- your total used credit in relation to your total available credit. The lower the ratio, the more positive an impact on your credit score.

However, if you qualify for the increase and then borrow on it, this could potentially hurt your score.

Other factors that affect your credit score are:

» Payment history.

» Amounts owed.

» Length of credit history.

» Types of credit in use.

Here are some other ways to improve your credit score:

» Pay your bills on time.

» If you have missed payments, get current and stay current.

» Maintain low balances on credit cards.

» Pay off debt, rather than just moving it between cards.

» Improving your credit score has many benefits. It can:

» Lower your interest rates.

» Speed up your credit approvals.

» Provide better credit-card, auto loan and mortgage offers.

The primary reason for increasing your credit limit should not be to increase your credit score. The general rule is to apply for credit only when you need it.

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Buddy, can you spare100 FICO points?

MINNEAPOLIS - Americans’ credit scores, the three-digit number that determines whether you’ll get a loan and how much you’ll pay for it, keep taking a beating.

Millions of consumers’ scores have dropped, making it more expensive for them to borrow money - or even impossible if the score has sunk low enough.

‘‘You have to watch out for a vicious circle. Now you have a bad credit history, which makes it harder for you to recover," said Evan Hendricks, a Washington-based expert and author on credit reports and scores.

The falling credit scores are a reflection of the times: plummeting home values, record foreclosures and the overall recession. At the same time, lenders are applying stricter standards to borrowers, including requiring higher credit scores. ‘‘For better or worse, our economy is very dependent on consumer spending,’’ Hendricks said. ‘‘If tougher standards mean that people with good credit can’t get credit . . . that could choke off the recovery or slow it down.’’

Most Americans may not know their actual credit score, but they’ve seen enough marketing by the credit-score companies, including Minneapolis-based Fair Isaac Corp., known as FICO, to know that the number, which can range from 300 to a perfect 850, has become a de facto national ID. Lenders rely on Fair Isaac’s FICO score, but so do employers when screening job candidates, insurers when issuing policies for homes and autos, and landlords when renting an apartment.

And exactly what many people are experiencing now - foreclosures, late credit-card payments - will bring down their credit scores.

Americans carry $2.56 trillion in consumer debt, up 22 percent just since 2000, according to the Federal Reserve. The average household’s credit-card debt is $8,565, up almost 15 percent from 2000. And a report out last month said borrowers with good credit now make up the largest share of foreclosures.

‘‘There’s no question a foreclosure can really slam your score,’’ Hendricks said. ‘‘It will easily send you into subprime territory.’’

Overall, he said, two major factors are bringing down credit scores: late payments because of the economy and credit-card companies reducing credit limits, meaning people are using a greater percentage of their available credit.

Walking away from a house takes a toll on a foreclosed homeowner’s credit. But so do late payments - in particular those that are more than 90 days overdue. According to Fair Isaac, which created automatic credit scoring, bankruptcy, credit card defaults and foreclosures stay on a person’s credit report for seven years. That said, a single bad account such as a foreclosure would be better than a bankruptcy, which usually involves many defaulted accounts. But if all other bills remain current, Fair Isaac says a foreclosed homeowner’s score could begin to rebound in as little as two years.

Fair Isaac shies away from devising a rating system of what ranges are ‘‘good’’ and which are ‘‘bad,’’ saying each lender has its own standard. In general, a score of 700 or better is a sign the consumer handles credit well. Most lenders say a score of 650 or below indicates a high credit risk that could mean higher interest rates or a tougher time getting credit. Information for the score is based on that person’s credit report.

The top 25 auto lenders and credit-card issuers use some version of the FICO score to make lending decisions, as do 90 of the top 100 U.S. financial institutions. It’s common for mortgage originators to pull credit scores from all three major credit bureaus and average them to help determine a consumer’s interest rate. For consumers, getting your credit report is easy - and free if you go to the right spot - but getting your score can be more complicated.

The three credit bureaus, Experian, Equifax and TransUnion, sell reports and scores to lenders and consumers. Also, Fair Isaac sells the bureaus’ FICO scores directly to consumers via myfico.com.

Fair Isaac spokesman Craig Watts estimated that the three credit bureaus sell ‘‘well over 10 billion’’ FICO scores each year to businesses.

Asked whether Equifax has seen an increase in consumers seeking credit information, company spokeswoman Wilson said, ‘‘Definitely, especially right now. People are very concerned about their scores. It’s the economic environment, the tightening credit market. People are very concerned about how their credit behavior impacts their financial well-being.’’

Under the Fair and Accurate Credit Transactions Act (FACT), consumers can get one free credit report a year from each of the three big credit bureaus. Consumer advocates warn of the many companies that have sprung up that charge consumers for information they can get for free.

Consumers who want their credit score will need to pay a small fee - generally about $15.

Consumer advocates recommend checking your report periodically. If you see inaccurate information on your report, inform the credit reporting company. Those companies must investigate and will generally do so within 30 days.

While Watts said millions have seen their scores drop, a ‘‘like’’ number of savvy consumers have seen their scores go up because they paid off balances and put off big purchases when the economy started to spiral down.

In good times, he said, the distribution is shaped like a bell curve. During a recession, it retains that shape but flattens out. ‘‘You have fewer people in the middle . . . and more people at both ends,’’ he said.

Watts said the best advice he can offer to consumers is this: ‘‘Don’t get too excited about the nuances in credit scores.’’

There are no ‘‘quick fixes’’ to repair a bad score.

‘‘The same general rules apply today that have applied for the last 20 years,’’ Watts said. ‘‘Pay your bills on time, keep balances low relative to the limit and take on new credit only . . . when needed. Those consumer habits are going to steer you in the right direction.’’

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