Starting December 1, 2004 the Fair Credit Reporting Act allows you to get one free comprehensive disclosure of all of the information in your credit file from each of the three major credit bureaus once per year.
Credit Bureaus
- What they Do.
Credit reporting
agencies or credit bureaus, collect information about consumers' financial
affairs and sell that information to their business members, such
as credit grantors, employers and insurance companies. The credit
bureaus charge annual fees as well as a fee for each credit report
requested by members.
In the US, there are
three main credit bureaus: Equifax Experian and TransUnion.
Most national and international
creditors, such as banks and department stores, are registered with
all three bureaus, so the chances are good that whatever shows up
on one credit report will also appear on the others. This makes it
simple for you to check your history. You really need to check only
one bureau's records.
Credit Bureaus
- How they get their Information.
Credit bureaus obtain
their information from three major sources:
1. Consumers supply
information, primarily from filling out application forms for credit.
2. Public records provide
information on such matters as bankruptcies, Court judgments, foreclosures
and agreements registered.
3. The major credit
grantors and collection agencies regularly send their credit files
electronically to the credit bureaus, resulting in files that include
the account number, outstanding balance, and a nine point scale indicating
whether a payment was made on time or late.
Credit Bureaus - What
the Points Mean.
The nine point scale is
as follows:
0 Too new to rate; approved
but not used.
1 Pays (or paid) within 30 days of billing; pays account as agreed.
2 Pays (or paid) in more than 30 days, but not more than 60 days,
or one payment past due.
3 Pays (or paid) in more than 60 days, but not more than 90 days,
or two payments past due.
4 Pays (or paid) in more than 90 days, but not more than 120 days,
or three or more payments past due.
5 Account is at least 120 days overdue, but is not yet rated 9.
6 (Code 6 does not exist.)
7 Making regular payments under a consolidation order or similar arrangement.
8 Repossession (indicate if it is a voluntary return of merchandise
by the consumer).
9 Bad debt; placed for collection; skip.
The FICO® score
The FICO® score,
developed by Fair, Isaac (the pioneer in credit scoring) is a number
between 300 and 850 that lenders use to determine your credit rating.
A FICO® score is a snapshot of your credit rating at a particular
point in time. The higher your credit score the more likely you are
to be approved for loans and receive favorable rates.
More than 70% of the
100 largest financial institutions use FICO® scores to make billions
of credit decisions each year, including more than 75 percent of mortgage
loan originations.
Credit Bureaus - Some
Words of Advice.
Checking Your
Credit Report:
Checking your credit report
If you are applying for a loan or credit, is vital. This report is
often a critical factor in credit scoring systems that lenders use
to issue credit cards as well as mortgages or other loans.
If you find problems, or if potential creditors discover them, you
can take steps to rebuild damaged credit and clean up that record.
If you've made mistakes in paying previous loans, bounced checks,
made late payments or had other problems, you may still be able to
reduce the amount of damage they will do to your credit with explanations
or some basic repair.
How To
Get a Copy of Your Credit Report
You can simply request a copy from one of the three major national
credit bureaus: Equifax, Experian and TransUnion.
If you applied for a loan and were turned down, you are entitled to
a free copy of your credit report, but you must request a copy by
writing the correct credit bureau within 30 days of the rejection.
Include a copy of the declined loan application.
You can also get a free report if you are unemployed, planning to
apply for jobs in the next 60 days, receiving public welfare assistance
or believe the credit file contains mistakes resulting from fraud.
Check Your Credit
Report Before
you Apply for a Loan
Check your report
if you are about to apply for a major loan, like a house or car. Give
yourself time to correct mistakes or make good on delinquent accounts.
For a home, you should check your credit at least three to six months
before you apply for a mortgage. For an auto loan, check your credit
(and arrange financing with your bank or credit union) before you
start shopping. For credit cards, check your report before you apply.
Correcting
Errors on Your Credit Report
Make sure the following information is correct: Your name; or names
if you are or were married; Social security number; Date of birth;
addresses of places you've lived; names of places you've worked; pending
accounts and accounts that have been closed
Ensure that nothing has been on the report longer than is allowed
by law:
Any error
that you find must be investigated by the credit bureau with the creditor
who supplied the data. The bureau will remove from your credit report
any errors a creditor admits are there. If you disagree with the findings,
you can file a short statement in your record giving your side of the
story. Future reports to creditors must include this statement or a
summary of it.
The Fair Credit Billing Act requires creditors to correct errors
promptly and without damage to your credit rating. The law defines a
billing error as any charge for something you didn't buy or for a purchase
made by someone not authorized to use your account; for something that
is not properly identified on your bill or is for an amount different
from the actual purchase price or was entered on a date different from
the purchase date; for something that you did not accept on delivery
or that was not delivered according to agreement.
Billing errors also include: errors in arithmetic; failure to show a
payment or other credit to your account; failure to mail the bill to
your current address, if you told the creditor about an address change
at least 20 days before the end of the billing period; questionable
items, or any item for which you need more information.
Once you have written about a possible error, a creditor must not give
out information to other creditors or credit bureaus that would hurt
your credit reputation until the matter is resolved. Until your complaint
is answered, the creditor may not take any action to collect the disputed
amount.
Caution
Be careful when applying for credit. When the companies you apply to
check your report they can find out who else has been checking your
report and determine what, when and how you have been applying for credit.
That means if you have been getting turned down and are desperately
applying for credit all over town your potential creditors will know.
Directory
