A Primer on Credit Reporting Agencies
What is a credit report?
Your credit history and other personal information are collected and filed with credit reporting agencies (CRA), such as TransUnion, Equifax and Experian. The CRA can legally sell this information to businesses that have the lawful right to obtain and use your private information when you apply for credit, insurance, or employment. If you have ever applied for a charge account, personal loan, insurance, or job, you have a credit record on file at a CRA. Your credit record contains information about your debts, credit history, employment, law suits, arrests, bankruptcies and other personal details.
Since over 2 billion credit reports are sold to businesses annually, most American consumers have their credit reports examined several times each year; and based on these reports, businesses are making Important decisions about our finances and employment. Considering this, it is surprising that only a small percentage of us ever bother to ask for and receive copies of our credit reports.
What’s information is in my credit report?
Your credit report contains the following types of information:
* Your Social Security number.
* The names and birth dates of you and your spouse..
* Where you live, where you work, and have worked.
* Your phone number and present-prior addresses.
* Whether you’ve paid bills on time, and your available credit.
* If you’ve been late with any payments, including rent.
* Bankruptcies, foreclosures, judgments, convictions or liens.
* To whom you have applied for a loan or credit.
* All companies who have obtained your credit report.
What is a credit score or insurance score?
Your credit score and insurance score are numerical classifications used to predict your creditworthiness, insurability, and employability. These scores directly effect your ability to gain employment, obtain insurance, loans, credit, and the rates you will pay.
Why should I care about errors in my credit report?
While a good credit report can help you, errors in your credit report can affect your finances and employment.
The General Accounting Office of the U.S. Congress (GAO) has stated that accurate credit reports are critical to the credit process for consumers and lending institutions alike. The GAO concluded that consumers should review their own consumer reports to ensure their accuracy.
Similarly, the Federal Trade Commission has stated that, because businesses use credit report information to evaluate consumers’ applications for credit, insurance, employment, and other purposes allowed by the Fair Credit Reporting Act (FCRA), it is important that the information in consumer credit reports are complete and accurate.
If there are mistakes in your credit report, only you will discover and correct them. You may assume you have great credit, but may be surprised at what’s in your credit report. Your report may show late payments that were actually made on time. Or, it may fail to show positive information about your credit, such as accounts that you have always paid on time. On the other hand, your report may be completely accurate. Unless you check it yourself, you may never know. For that reason, Congress has urged all Americans to check their credit reports and correct any mistakes.
Can I demand to know what’s in my credit report?
Yes. If you contact the major credit reporting agencies, they must provide your information they have on file.
What is the Fair Credit Report Act?
In 1970, Congress passed the Fair Credit Reporting Act (FCRA). The FCRA requires, among other things, a company that takes adverse action against you, based in whole or in part on information in your credit report, to inform you of its decision. The company must also provide the name of the credit-reporting agency that furnished your credit report, and information on how to contact that agency. The company must also advise you of your right to obtain a free copy of the report that was used to take adverse action against you.
Federal Trade Commission Article:
What do I need to know about free credit reports?
So, if a company takes adverse action against you, such as denying your application for credit, insurance or employment, they must serve notice to you which will contain the name, address, and phone number of the credit-reporting agency. If you request your report within 60 days of receiving this notice, there is no charge.
Even if you haven't been denied employment, credit or insurance, you may want to obtain a copy of your credit reports. Since the information in your credit report changes frequently, the federal government and credit experts advise you to check for inaccuracies or omissions regularly.
Fortunately, under a new federal law, the Fair and Accurate Credit Transactions Act (FACT Act), you may have the right to receive a free copy of your credit report once a year from each of the three major consumer reporting agencies - Equifax, Experian, and TransUnion. To request your free annual report under that law, go to AnnualCreditReport.com.
Federal Trade Commission Article:
How can I fix errors in my credit reports?
You must notify the credit-reporting agency that there are errors in your report and provide documentation to support your position. Under the law, the agency must conduct an investigation into the accuracy of the information. This includes contacting the source of the information that you believe is incorrect and obtaining verification. Generally, the agency has 30 days to investigate. After the agency completes its investigation, it has five days to report back to you. If the agency can’t verify the negative information, it has to delete it. If the negative information stays in your file, you have the right to have it marked as disputed information.
Federal Trade Commission Article:
Who are the major credit reporting agencies?
Where can I find more information?
