Credit Reports 101

A credit bureau is the most common type of Credit Reporting Agency (CRA).  There are three major credit bureaus (Equifax, Experian and TransUnion) that gather and sell information about you.  The information that each credit bureau has may vary, and it is compiled in what is frequently referred to as a credit report. Credit bureaus collect the following four basic types of information:

• Identification and employment - includes your name, address, birth date, Social Security number, and employer.

• Payment history - lists your accounts with different creditors and shows how much credit is extended and how you repay them (on-time or late).  Collection activity may also be included.

• Inquiries - lists creditors, businesses or persons who have requested your credit history.

• Public record information - events that are a matter of public record, such as bankruptcies, foreclosures, or tax liens, may be included in your report.

You have the right to know what is contained in your report as per the Fair Credit Reporting Act (FCRA).  The FCRA is designed to promote accuracy and ensure privacy of your information, in addition to outlining dispute procedures if you find errors, you can initiate a credit score repair.

It is recommended that everyone requests and reviews all three credit reports once per year, and three to six months before applying for credit for a major purchase (house, automobile, etc.).  This gives you time to correct any inaccuracies and repair your credit score.  It is important to note that only the passage of time can remove negative information that is accurate.  Generally, accurate negative information can remain on your credit report for seven years and bankruptcy information may be reported for 10 years.  The standard method for calculating the seven-year period is seven years from the date the negative event took place.

If you find inaccuracies in your report, both the credit bureau and the provider of the information, such as bank or credit card company, have responsibilities to implement a credit score repair procedure and correct the information.  To protect your rights under the FCRA, dispute the information by contacting both the credit bureau and provider in writing, certified return receipt, explaining what is inaccurate.  Supply copies of supporting documents, and keep copies of what you send.  The item in question must be investigated usually within 30 days. If the disputed information cannot be verified, it must be deleted; if it is incorrect, it must be corrected.  You will receive written results when the investigation is complete and a free credit report if the investigation resulted in a change.  You also have the right to add a written explanation to your report.

For more information about your rights under the FCRA, refer to this site: http://www.ftc.gov/bcp/conline/pubs/credit/fcra.htm.