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Your credit report contains important information about you. It generally includes facts about your identity, where you work, live, your bill-paying habits, and public record information. Credit grantors use credit reports to determine whether or not you will be extended credit. Identity information includes your name, address, marital status, Social Security number, date of birth, number of dependents, and previous addresses. Employment data includes your present position, length of employment, income, and previous jobs.
Factual information about your credit history consists of your credit experiences with specific credit granters. Public record information includes civil suits and judgments, bankruptcy records or other legal proceedings recorded by a court. A credit report does not contain information on arrest records, specific purchases, or medical records.
Companies called credit reporting agencies or credit bureaus compile and sell your credit report to businesses, which use it to evaluate your applications for credit, insurance, employment, and other purposes allowed by federal law. Therefore, it is important that your credit report contain complete and accurate information.
Most of the information in your consumer credit report comes directly from your current creditors. Credit bureaus compile the data and then provides it to lenders when you ask for a new credit card or loan. The credit report's purpose is to help a lender decide whether to grant you credit.
It is advisable that you review your credit report every three or four years to check for inaccuracies or omissions. You also may want to check your report sooner if you are considering a major purchase, such as buying a home.
Your Credit Report will usually contain:
What's not in a credit report:
The credit bureau's role is only to provide credit information. They do not take part in any credit granting decision.
Consumer credit bureaus serve as control storehouses — or libraries — of credit repayment information. They collect the credit information from credit grantors such as banks, savings and loans, credit unions, finance companies, and retailers.
Credit grantors then access this combined information from the bureaus to help them make lending decisions. Today there are three major nationwide credit bureaus. In addition, many smaller, independently owned credit bureaus serve local markets. Most of these smaller bureaus have contractual agreements with the three major bureaus. They even store data on the major bureaus' computer systems.
There are some things credit bureaus do not do, however. Here are a few:
See Who Can Order my Credit Report? below.
Living in a society driven by credit, we often overlook what we'd do without it. If there were no automated credit information services, for example, we'd find it much harder and time consuming to apply for credit.
Because of an automated credit reporting system, you have unlimited options in your financial life. For example, you can:
All these opportunities are possible because an automated credit reporting system works quietly in the background on your behalf.
In addition, automated credit reporting helps credit grantors make fair, accurate, consistent and objective credit decisions. Automated consumer credit reporting keeps your personal credit information private with a diverse system of safeguards and controls.
There are limited circumstances under which a credit bureau may furnish consumer credit reports. These permissible purposes are:
Employers who Wish to Secure a Credit Report Must:
Prior to obtaining a consumer report:
After an adverse decision is made for employment purposes based on information contained in a consumer report, provide the employment applicant with an employment adverse action notice.
There is no model employment adverse action form available. A summary of an employer’s disclosure obligation when an adverse employment decision is made is provided at http://www.ftc.gov/os/statutes/fcra/weisberg.htm.
A credit report on a specific consumer doesn't really exist until a credit grantor requests it. When that happens, the credit bureau compiles the report from the creditor and tens of thousands of possible information sources — retailers, bankcard issuers, banks, finance companies, etc. These sources send updates to the credit bureau each month about how their customers use and pay their accounts.
The credit bureaus also collect public record data from state and county courts. This information is limited to bankruptcies, tax liens, monetary judgments, and, in some states, delinquent child support payments.
When you apply for credit, the lender contacts the credit bureau that they use and requests a report on you; giving them information from your credit applications. If the bureau already has a file on you, they can give the lender that information in a matter of seconds. The lender must have a permissible purpose under federal law before accessing credit information.
One thing to keep in mind about credit reports: They don't stay the same for long. Because credit grantors continuously update their records. Your report may change from day to day.
How to Avoid Mix-ups
To ensure that you get the credit you deserve, here are a few simple steps you can follow when apply for new credit:
Most credit grantors report their data to credit bureaus at least monthly. Some smaller lenders, however, do not report information to credit bureaus.
Be aware that when negative information in your report is accurate, only the passage of time can assure its removal. Credit reporting agencies are permitted by law to report bankruptcies for 10 years and other negative information for 7 years.
Also, any negative information may be reported indefinitely for use in the evaluation of your application for:
Adding Accounts to Your File…
Your credit file may not reflect all of your credit accounts. Although most national department stores and all-purpose bank credit card accounts will be included in your file, not all creditors supply information to credit reporting agencies.
If you have been told that you were denied credit because of an "insufficient credit file" or "no credit file" and you have accounts with creditors that do not appear in your credit file, you can ask the credit reporting agency to add this information to future reports. Although they are not required to do so, many credit reporting agencies will add other verifiable accounts for a fee.
If you have been denied credit, insurance, or employment because of information that was supplied by a credit reporting agency, the Fair Credit Reporting Act requires the report recipient to give you the name and address of the credit reporting agency that supplied the information within 30 days after the credit was denied. If you contact that agency within 60 days of receiving the denial notice, you can receive a free copy of your credit report.
If you simply want a copy of your report, call the credit reporting agencies listed in the Yellow Pages under "credit" or "credit rating and reporting." Call each credit report agency listed since more than one agency may have a file on you, some with different information. You may have to pay a reasonable charge for each report. You are allowed one free credit report annually.
Three large national credit bureaus supply most credit reports: Experian, Equifax, and Trans Union. You may want to contact each of them for a copy of your report.
Experian (Formerly TRW )
P.O. Box 949
Allen, TX 75013-0949
Equifax Credit Information Services, Inc.
P.O. Box 740241
Atlanta, GA 30374-0241
Trans Union Corporation
Trans Union Consumer Relations
760 West Sproul Road, P.O. Box 390
Springfield, PA 19064-0390
To provide you with a full and complete copy of your credit report, the credit bureau need the following information:
When you show proper identification, the credit reporting agency must then disclose to you all its information and identify the sources of that information. The law requires the credit bureau to disclose the "nature and substance" of the information in the file. You must also be informed about anyone who obtained reports for employment purposes in the past two years, plus the names of all others who requested credit reports or other information about you in the past six months.
A consumer reporting agency will send a free report once in any 12-month period upon request of a consumer if the consumer is unemployed and intends to apply for employment in the 60-day period beginning on the date on which the certification is made, is a recipient of public welfare assistance, or has reason to believe that the file on the consumer at the agency contains inaccurate information due to fraud.
If your spouse has cosigned, get your spouse's history, too, some bureaus will send you your spouse's record on request; others require his or her express consent. There is no such thing as a joint credit report. You have to request the reports filed under each of your names.
You have the right, under the Fair Credit Reporting Act, to dispute the completeness and accuracy of information in your credit file. When a credit reporting agency receives a dispute, it must reinvestigate and record the current status of the disputed items within a "reasonable period of time," unless it believes the dispute is frivolous or irrelevant." The credit reporting agency is to take the following actions:
If the credit reporting agency cannot verify a disputed item, it must delete it.
If your report contains erroneous information, the credit reporting agency must correct it. For example, if your file showed an account that belongs to another person, the credit reporting agency would have to delete it.
If an item is incomplete, the credit reporting agency must complete it. For example, if your file shows you were late in making payments on accounts, but failed to show that you were no longer delinquent, the credit reporting agency must show that your payments are now current.
At your request, the credit reporting agency must send a notice of correction to any report recipient who has checked your file in the past six months.
You must make your dispute directly to the credit reporting agency. Although the Fair Credit Reporting Act does not require it, the Federal Trade Commission staff recommends that you submit your dispute in writing, along with copies (NOT originals) of documents that support your position.
In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute; explain why you dispute the information; state the facts; and request deletion or correction. You may want to enclose a copy of your report with the items in question circled.
Send your dispute by certified mail, return receipt requested and keep copies of your dispute letter and enclosures.
Your City, State, Zip Code
Name of Credit Reporting Agency
City, State, Zip Code
Dear Sir or Madam:
I am writing to dispute the following information in my file. The items I dispute also are(highlighted/circled) on the attached copy of the credit report I received.
This item (identify item/s disputed by name of source, such as name of creditor or tax court, and identify type of item, such as credit account, judgment, etc.) is inaccurate or incomplete because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information, is inaccurate or incomplete because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.
Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please reinvestigate this/these matter/s and (delete or correct) the disputed item/s as soon as possible.
Enclosures:(List what you are enclosing)
A person who furnishes information to one or more consumer reporting agencies and has furnished to a consumer reporting agency information that the person determines is not complete or accurate, shall promptly notify the consumer reporting agency of that determination and provide any corrections to that information to the agency and any additional information that is necessary to make the information provided by the person to the agency complete and accurate. The person shall not thereafter furnish to the agency any of the information that remains not complete or accurate.
A person who regularly and in the ordinary course of business furnishes information to a consumer reporting agency regarding a consumer who has a credit account with that person shall notify the agency of the voluntary closure of the account by the consumer, in information regularly furnished for the period in which the account is closed.
If a reinvestigation does not resolve your dispute, you can file a statement of up to 100 words to explain your side of the story. The credit reporting agency must include this explanation in your report each time it sends the report out. As well as to each report made within 60 days prior to your request. Credit reporting agency employees often are available to help you word your statement.
If the Credit Reporting Agency violates the Fair Credit Reporting Act, you may file suit alleging willful noncompliance with the law and receive actual and punitive damages up to $1,000 for each violation — and have your attorney fees paid also.
What About a Credit Repair Company?
It is recommended that a credit repair company be looked at long and hard before being used. The law gives a consumer certain rights to accuracy in the credit report. If a credit report is repairable, it can be done by the consumer. If it contains accurate, negative information, handing money to a credit repair company will not help. They cannot remove accurate information or information you cannot have removed.