Credit Reports

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At one time or another, almost everyone in America has applied for credit. When we fill out a rent application, the landlord usually wants to do a credit check to find out how we pay other bills. The majority of today's college students will need the assistance of student loans to pay for college. Given the fact that most of us will purchase something on credit at one time or another, it is important to understand what are credit reports and how the information is collected.

What is a credit report?
Credit reports are issued by credit reporting agencies. These agencies keep a file on a person’s credit history. The agencies sell the information to banks, stores, loan companies, and other businesses that want information about your credit history.

What information is in a credit report?
Credit reports lists any credit card accounts or loans you may have,the balances, and how regularly you make your payments. The report also indicates whether any person or company has taken action against you because of unpaid bills. There are generally four parts to a credit report:

  1. Identifying information about you: Your full names, any known aliases, current and previous addresses, social security number, year of birth, current and past employers, and, if applicable, similar information about your spouse.
  2. Your credit information: The accounts you have with banks, retailers, credit-card issuers, utility companies, and other lenders (accounts are listed by type of loan, such as mortgages, student loans, revovling credit accounts like a department store account or credit card, or installment loans such as a car loan; the date you opened the account; your credit limit or the amount of the loan; any co-signers of the loan; and your payment pattern over the past two years.)
  3. Public records information: State and county court records on bankruptcy; tax liens, or monetary judgments (some consumer reporting agencies also list non-monetary judgments)
  4. Inquiries: The names of those who have obtained copies of your credit report within the past year (two years for employment purposes).

Who makes decision about whether or not to grant me a loan?
The company or person to whom you are applying for credit makes the decision about whether or not to grant you a loan. The credit reporting agencies only supply the information.

How can I get a copy of my credit report?
There are 3 major credit reporting companies. If you want to see your credit report, you should get your report from each company. (Each company may have different information because creditors choose to which company to send information.) The three major bureaus are TransUnion, 1-800-916-8800, www.transunion.com; Equifax, 1-800-685-1111, www.equifax.com; and Experian, 1-888-685-3742, www.experian.com.

You are entitled to receive your report within fifteen days of your request.

How much does it cost to get my credit report?
You are entitled to one free credit report per year from each of the three major credit reporting agencies. You can get a copy of all three credit reports for free once a year at one location on the internet. You can visit www.annualcreditreport.com to get a free copy of your credit report once a year. You will be asked to enter some basic information about yourself and answer some questions to verify your identity before accessing a report from each credit agency. Each agency may offer you additional information, such as your credit rating, for a fee. You do not have to pay for these extras to get your credit report.

Even if you have received a free report within the past year, you can obtain another free report if you have been denied credit, insurance, or a job recently because of information on your credit report. The company that denied you based upon a credit report should tell you which credit reporting agency was the basis of your denial. That agency should then give you a free report (if you ask within 60 days of the denial).

Finally, you are entitled to a free report any time you contact the credit reporting agency to report credit fraud.

If none of these situations apply to you, you can get a credit report for a modest fee.

I don’t plan to try to get any loans, so does my credit report matter to me?
Yes, it might. Credit reports are used by a variety of businesses. If you are getting homeowner’s insurance or car insurance, your credit report might be pulled. Your employer (or potential employer) might pull your credit report. (However, your employer or potential employer must first have your permission). Your credit rating also affects your auto and homeowners' insurance rates. So your credit report may be used for reasons other than trying to get a loan.

What if there is a mistake in my credit report?
You have important rights to dispute and correct your report – see How Can I Correct Errors in my Credit Report?

How long will negative information stay on my credit report?
In general, negative information stays on your report for 7 years. However, some items can remain on longer. For example, information about a bankruptcy can stay on for 10 years.

Should I hire a credit repair company to fix my credit report?
No, not usually. You can correct errors on your credit report yourself. You usually do not need to spend money to fix errors on your credit report.



Reviewed August 2009