Credit Report - Q & A

There are three main credit bureaus that provide credit information to CRAs. You may write or call any of these bureaus to obtain a copy of your credit report. Keep in mind that the bureaus do not share information with each other, so you should contact all three to get a full picture of your credit.

Equifax
Information Service Center
P.O. Box 740241
Atlanta, GA 30374-0241
1-888-909-7304 (phone)

Experian (formerly TRW)
National Consumer Assistance Center
P.O. Box 2104 Allen, TX 75013-2104
1-888-397-3742 (phone)

Trans Union Corporation
Consumer Disclosure Center
P.O. Box 390 Springfield, PA 19064-0390
1-800-888-4213 (phone)

Only individuals and companies with business needs as recognized by the FCRA may obtain a copy of your credit report. The most common business reasons a company will obtain your credit report is when you apply for credit, employment, or insurance. No employer can obtain a copy of your credit report without your prior written consent. Medical information cannot be provided to another party without your permission.

Some creditors and insurers may use limited file information as marketing tools for their unsolicited credit and insurance offers. All unsolicited offers must include a toll-free phone number for you to call to remove your name and address from their lists. An additional step you can take to keep your name off lists permanently is to complete a CRA form prepared for this purpose.

A credit score is a number based on a calculation by a mathematical model using pre-determined parameters to evaluate your credit worthiness. Credit scoring is based on your current and past credit history. Your credit score is a summary of your credit history, your current credit, and even a prediction of your future credit performance.

The three major credit bureaus worked with Fair Isaac Company (FICO) to develop credit scoring models. Each credit bureau can calculate your credit score based on the information in that bureau's credit files. This credit score is then used by the lender/broker in determining whether you qualify for the loan for which you are applying.

Credit scores are calculated using mathematical tables with points assigned to each piece of information. These "scoring models" include factors that have been proven to predict future credit performance. The following are some examples of factors that will be used to calculate a credit score:

• Number of open credit accounts
• Amount of credit balances
• Length of credit history
• Number of credit inquiries
• Past and current payment delinquencies
• Other derogatory credit

One of the main consumer benefits of credit scoring is the reduction in time it takes to obtain a lending decision. If your credit score fits into a lender's requirements, your loan decision will take less time because of computerized underwriting systems.

Another benefit involves the anonymity of the credit score. The credit score DOES NOT include factors like race, martial status, place of residence, or any other possible discriminatory areas. The credit score is solely based on your past and present credit performance. The only disadvantage of credit scoring is the fact that scores are calculated using information provided by a credit bureau. If any of the information reported to a credit bureau is incorrect or derogatory, your credit score will be affected. Luckily, mortgage lenders/brokers are aware of this potential problem and ways exist to correct your credit report if needed.

If you find an inaccuracy on your credit report, you should definitely correct it. It is up to you to begin the process of correcting your report. Luckily, the Consumer Reporting Agency (CRA) and the information provider have responsibilities under the Fair Credit Reporting Act (FCRA). You must contact the information provider and all three of the credit bureaus to protect your rights under the FCRA. If you are applying for a mortgage at this time, you should also make your lender/broker aware of any mistakes on your credit report.

The best way to dispute inaccurate information is to contact, in writing, each CRA. The CRAs are required to investigate the items you are questioning unless they believe your dispute to be frivolous. This must usually be done within 30 days. Their investigation includes forwarding your dispute to the information provider in question. The information provider must then review all relevant information and report their findings to all CRAs. If the information on your credit report was incorrect, your file must be corrected. You will receive the written results and a copy of your credit report from the CRA if the dispute results in a change.

At the same time you contact each CRA in writing, you should also contact the information provider directly.

Most negative information can be reported on your credit report for 7 years. Exceptions include:

• Bankruptcies may be reported for 10 years
• Information reported for a job application with a salary of more than $75,000 has no time limit
• Information reported for a credit or life insurance application for more than $150,000 has no time limit
• Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer

No one change you make to your credit report will have a large impact immediately. You can do some things to improve your score in the future however.

• Pay all of your creditors on time. Late payments and collections have a negative impact on your credit score.
• If you have a lot of accounts with delinquencies that have also been closed, obtain new credit and pay on time. You need good payment records to help offset any past poor payment histories.
• Pay down loan balances. If your balance on an account is right at the credit limit, your credit score will be affected negatively.
• Be careful about letting people obtain your credit report. The more companies that request your credit report, the lower your credit score.

The FCRA gives you specific rights as a consumer. You might also have additional rights under your state's laws. Some of these rights include:

• You can dispute inaccurate information with the CRA.
• You must receive a written report of the investigation into any dispute from the CRA along with your credit report.
• Inaccurate information must be corrected or deleted.
• If you have been denied credit, insurance or employment based on information provided on a credit report, the lender, insurance, or employer must provide information regarding the CRA they used to obtain your credit report.
• You can dispute inaccurate information with the information provider.
• If the disputed information is proved to be incorrect, the error must be corrected and never reported again.
• If any information on your report is outdated (i.e., 10 years for a bankruptcy) it must be removed.
• You may sue violators of the FCRA in state or federal court (see complete FCRA for details).