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YOUR CREDIT REPORT

Each time you apply for a loan or credit card, your credit record is evaluated.  Lenders get information on your credit history from credit bureaus.  Credit bureaus maintain information on your credit obligations and bill paying habits.  Credit bureaus do not rate credit or make credit decisions.  Lenders use the information in the credit report to measure credit worthiness.

WHY COULD YOU BE DENIED CREDIT?

Credit worthiness is very subjective.  Since every lender has its own credit standards, your loan request could be denied by one institution and be accepted by another.

The amount of bills you have to pay, whether you pay bills on time or have any collateral to offer affect your ability to borrow.  How long you have worked at the same job, if you own a home or are self-employed also may affect a credit decision.  How many recent inquiries have been made on your credit files also may be a factor.  If you have applied for a lot of credit within a short period, you could be turned down for having too many inquiries.  If you have a checking account where you are applying for a loan, the lender may also consider any overdrafts you may have had in their loan decision.

Negative information in your credit file has a major impact on your ability to borrow money, qualify for insurance coverage and, in some cases, get a job.  If you are late paying bills, have a lien against your income or have declared bankruptcy, you may find it difficult to get credit.

However, a bad situation does not last forever.  There is a limit to how long adverse information may remain in a credit report.  Bankruptcies must usually be removed from your credit history after ten years.  Suits and judgments, tax liens, arrest records and most other kinds of unfavorable information must usually be removed after seven years.

There also could be negative information in your file that is not your fault, or that you do not even know about.  Mistakes happen.  Creditors may send in wrong or out-of-date information.  Resolved disputes or extenuating circumstances may not be reported.

Sometimes the wrong information is reported because of similar names.  People with similar names, who live at the same address, should check their credit reports regularly.  Also, if you change your name, due to marriage or divorce, be sure to check your credit report afterwards to verify that the information is correct.  On rare occasions, an unauthorized person abuses an account that is in your name.

The credit bureaus admit that they have no idea how many errors are in their files.  Available data suggests that the number may be high.  Over one-third of consumers who saw their reports last year disputed the information as inaccurate or incomplete.

HOW TO GET A COPY OF YOUR CREDIT REPORT

Most people wait until they are denied credit to check their reports.  It is a good idea to review your record at least once a year even if you have not been denied credit.  That way, you may avoid a nasty surprise the next time you apply for a loan, insurance or a job.

You can get a free copy of your credit report if you have been turned down for a loan within the past 30 days.  The rejection letter will include the name and address of the credit bureau.  You may receive a summary of your credit file by telephone or in writing.  Call the credit bureau for more information.

If you have not been denied credit, you may order a copy of your credit report for a fee.  The three major credit bureaus are Equifax Inc., TransUnion Credit Information Co. and Experian.  You should get a copy of your report from each of the major credit bureaus.

While most large banks and finance companies report your credit activity to all of the major credit bureaus, not all institutions do so.  As a result, each credit bureau may have different information.  Check a local phone book for the telephone numbers and addresses of the credit bureaus.

WHAT IS IN YOUR CREDIT REPORT?

A credit report usually contains:

·        Identity Information

This may include your name and that of your spouse, current and former address, gender, martial status, number and age of dependents and Social Security Number.

·        Employment Information

This includes your current position, firm, length of employment, salary and former employer.

·        Public Records Information

Public records are bankruptcies, liens and judgments.

·        Credit Information

The date the loan or credit account was opened, high credit, term or monthly payment, balance owed and lateness in paying bills are include

·        Inquiries

These indicate who has made recent inquiries about your credit.  This includes both inquiries initiated by you while applying for a loan and pre-screening for promotional purposes.

Credit reports can be confusing and difficult to read.  On the back of the credit report will be a key that explains the codes on the front of the report.  If you do not understand the credit report, contact the credit bureau that provided it.  The Fair Credit Reporting Act requires that the credit bureau explain it to you.

HOW TO CORRECT ERRORS

Credit bureaus are not responsible for the information in your report.  They are clearing houses for the information sent to them by lenders.  According to Federal law, you have the right to correct errors in your credit file.  Credit bureaus must investigate any information you dispute, usually within 30 days after you call it to their attention.

If you find an error in the credit report, write both the credit bureau and the institution whose account is in error.  Be sure to write to both places; a telephone call is not enough.

The credit bureau must delete any information from the report that it cannot verify.  The credit bureau will also change any information the lender agrees is in error.  Be sure to check the report to make sure the correction was made.  Sometimes the credit bureau may correct your report, but the lender does not correct the file on its end.  As a result, the next time the lender sends an update to the credit bureau, the error goes back into your report.

If you disagree with the results of the investigation, you may add a statement to your file explaining your version of the discrepancy.

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Last modified: 11/04/07