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Credit Report Basics
Suzanne McGarvey, M.S., Consumer and
Family Economics,
University of Missouri Extension
Do you ever wonder how lenders decide who gets a loan
and who doesn't? Ponder why you were turned down for
that credit card? Think that you might file for
bankruptcy and hope no one will ever know? If so, you
need to know more about your credit report, how it
works, and how it can affect your financial future. The
following information gives basic information about what
a credit report is, who uses it, how to obtain a copy of
your own, and correcting a mistake if you find one.
What is my credit report?
Your credit report is a compilation of financial data
about you. Credit bureaus across the country compile
credit information from banks, finance companies,
merchants, credit card companies, and other creditors
and enter it into a centralized computer system. Your
report contains personal information such as your
address, social security number, and birth date. It may
also contain information about your employment and
income, spouse's information, former addresses, etc.
More importantly, your credit report file details
information about credit transactions and balances due,
payment history, suits, judgments and tax liens. Your
record also shows if you have declared bankruptcy. This
is especially important to note, because this
information will not be removed from your file for seven
to ten years!
Who uses my credit report?
A potential creditor will usually check your credit
report when you apply for a loan or credit card or rent
an apartment. The lender or company will request a copy
of your report and make their lending decision after
reviewing your history. The lending company, not the
credit bureau, makes the decision about whether you are
approved or not. Potential employers may want to see
your credit report as well. Your report cannot be used
by just anyone who wants information about you (such as
friends). Anyone requesting a copy of your report must
want it for an approved purpose and must be able to
provide proof that they are a legitimate company with
the right to view your report.
Can I see a copy of my credit report?
Yes, and in fact, it is a good idea to periodically
check your credit report to be sure that the information
is correct. Congress created the 1971 Fair Credit
Reporting Act, which gives you the right to see a copy
of your report. As of March 1, 2005, you can order a
free credit report one time each year. The three largest
credit reporting bureaus are using one central address
to provide this information. Do not contact the credit
bureaus directly to obtain your free annual credit
report. To order your free credit report:
- Visit
www.annualcreditreport.com; OR
- Call 1-877-322-8228.
Be cautious about companies offering “free credit reports” on slick TV commercials, on websites or in magazine advertisements. Many of them have a snag such as having to pay a hidden fee for some other service they offer or requiring a subscription of some kind. You do not need a company to obtain a free credit report for you; can you do it yourself. The contact information listed directly above is the official place to go to get your free credit report.
You can contact the three large credit reporting
bureaus directly to request a free credit report
every twelve months if:
- you have been turned down for credit, employment
or insurance within the last thirty days due to
something in your credit report;
- you are unemployed and plan to seek employment
within 60 days;
- you are on welfare; or
- your report is inaccurate due to fraud.
Otherwise, you usually have to pay a small fee to
obtain a copy of your report.
The three largest credit bureaus are:
Equifax
P.O. Box 740241
Atlanta, GA 30374
1-800-685-1111
Trans Union
2 Baldwin Place, P.O. Box 2000
Chester, PA 19022
1-800-888-4213
Experian
P.O. Box 2002
Allen, TX 75013
1-888-397-3742
There is also another large credit bureau called
Innovis Data Solutions.
This bureau differs from the other three main ones,
however, because it sells your credit information to
companies that compile mailings for unsolicited mail,
including credit cards. You can also look under “Credit
Bureaus” in your local yellow pages.
There is a mistake on my credit report. Now what?
If you find an error on your credit report, contact the
credit bureau. If the information is very old (more than
seven to ten years), the information should be deleted.
If it is a more recent error, provide as much
information as you can about the situation. The bureau
must investigate the problem. You also may try
contacting the reporting party to see if they can help
you resolve the situation. If you cannot resolve the
issue, you can file a written statement of up to 100
words with the credit bureau telling your side of the
story.
Note: Beware of "credit repair" scams that promise to erase your bad credit history. You can take the same steps they will take to remove incorrect information without having to pay a high fee. Information that is legitimate, however, cannot be magically erased--by anyone!
Last update: Friday, April 04, 2008
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