Did you know that under the 2003 Fair and Accurate Credit Transactions Act, every American could obtain a free copy of one of the most vital consumer documents? It's your credit report and there are three primary credit bureaus that provide them: Equifax, Experian, and TransUnion. You can get a free copy of your credit report from each of these firms once a year. All you need do is ask. Go to www.annualcreditreport.com.

Keep in mind that whenever you borrow any money, whether for a car or mortgage loan, or even by using a credit card, the lenders report your payment history to these credit bureaus. Lenders generally use a risk-based modeling to decide whether they want to extend any credit to you as well as the terms of any loan. The better you score, the better it is that you will get a more favorable rate. Why? Simply because lenders can offer people with high credit scores better rates that those with low scores. Stands to reason. It's all based on risk.

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