Your credit report is information about your borrowing and repayment history. It is put together using facts provided by your creditors and from public records such as court documents. Credit bureaus compile the data for potential creditors, employers, and others who can show they have a legitimate business reason to ask for it. Credit bureaus do not approve or reject you as a credit risk.
Your records are most likely to be requested from one (or all) of the three largest credit bureaus in the United States:
- Experian (formerly TRW)
- Trans Union
Getting A Copy
Under the Fair Credit Reporting Act (FCRA) you are entitled to a free credit report within 60 days of being denied credit, employment, insurance, or rental housing based on information in the report.
You are also entitled to a free report once a year if you certify: you are unemployed and seeking employment; you are receiving public welfare assistance; or you believe your credit file contains inaccuracies resulting from fraud.
Otherwise, you will need to pay a fee for each report you request. Equifax, Experian (TRW), and Trans Union are the top three credit bureaus.
If you’ve never read a credit report before – especially if you are disputing a derogatory one – it’s a good idea to have a credit counselor or someone knowledgeable review it with you.
Although credit bureau reports may not look alike, they contain many of the same items. Usually included are your credit record and relevant facts such as your age, address, marital status, and employment history. When reviewing, check the details! Be sure your name is spelled right, and the record shows the correct Social Security number and birth date. Any phone numbers, addresses and employer information should be up-to-date.
Your report will show who has requested information about you at your request (such as when you apply for a credit card). It should also tell you who was given information by the bureau in order to send you offers of credit or insurance.
A credit bureau report also lists your creditors (such as retail stores, mortgage companies, and credit card companies.) You can check for obvious problems, but be aware that lenders also look for certain behaviors. For example, even if you have no outstanding balances, holding or applying for several credit cards may hurt your cause. Or your debt ratio, the percentage of your monthly income that goes towards credit payments, may be higher than acceptable.
You may also be denied credit if you have not established enough of a credit history to be evaluated.
At Lenders Home Mortgage, we understand that some times good people have less than perfect credit. We can work with you to find a program that’s right for you.
What can you do if your credit report contains incorrect or derogatory information?
If the information in your report is inaccurate or unfair, you will need to correct it. This can take some time and effort on your part, but remember – a negative report will haunt you for at least seven years.
First, contact the creditor that filed the complaint, correct the error and ask that any credit bureaus involved be notified in writing. Be sure to document your efforts. If the credit bureau made the mistake, challenge it. By Federal law, it will have to delete the disputed information if it can’t be confirmed. Both the credit bureau and the creditor who filed the derogatory information must help you resolve the issue in a timely manner, within 30 days.
If the credit bureau finds their information to be confirmed, you may still attach a “Statement of Dispute” to argue your side of the story. (For example: “I returned that purchase, and they lost the credit slip.”) This should not be confused with an explanatory note that might say something such as, “I lost my job and wasn’t able to pay my bills that month.” Warning: explanatory notes can do more harm than good. And because of the seven year holding period, both notes might actually stay on your record longer than the original problem transaction.
With new regulations effective October 1997, both your creditor and the credit bureaus must take reasonable steps to ensure that incorrect information does not reappear in your file after it has been removed.
Note: Paying off a delinquent account will clarify that nothing more is owed, but the fact that it was once delinquent can stay on your record up to seven years. Similarly, closing an account doesn’t remove it from your credit report.
Once corrected, the credit bureau will send a revised copy of your report to any credit grantor who requested it over the past six months. However, they may do so only if you ask them to send it.
Although it isn’t that common, your credit report will show you if someone is using – or trying to use – your credit information for fraudulent purposes. You may see credit cards or loans you did not apply for, or address change notices you did not submit. Worse, your good credit record may have been damaged.
Notify the credit bureau(s) at once. They can offer advice and help you put together a list of affected creditors to notify. They also add a fraud statement to your report. This action alerts future creditors to verify your identification before granting credit. Although the credit bureau may be helpful, bear in mind that it is your responsibility to notify creditors of fraud.
Currently, companies can ask to review your credit history and send written credit or insurance solicitations based on what they find. You have the right to keep your credit information from being distributed without your permission.
Federal law states that credit bureaus must provide an address and toll-free telephone number that you may use to request your credit report not be be distributed without your permission.