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About Credit Reports
What is a credit bureau?
Credit bureaus, or credit reporting agencies, are basically clearinghouses for information about a consumer's credit history. When
you apply for credit, the credit bureaus provide your credit history information to qualified requestors. There are 3 main credit bureaus: Equifax,
Experian, and TransUnion.
How do the credit bureaus obtain information?
Credit bureaus collect information from banks, savings and loans, credit unions, finance companies, and retailers about
your credit record.
Do all 3 credit bureaus have the same information on file?
No, because lenders send information to some and not others. Credit bureaus receive more than two billion pieces of
data each month, so it's a given that mistakes are going to happen.
Credit reports are available from 3 main reporting agencies: Equifax, Experian, and TransUnion, and these "big
three" do not exchange information with each other. Therefore each of the 3 credit bureaus may have different information about your credit history, depending
on who and what was reported to them. What is on one credit report may differ from another. This is why a merged credit report or 3-in-1 credit report has become a popular method for consumers to obtain their credit information. A merged or 3-in-1 credit report basically "merges" the information found on all 3 credit files.
Who can look at my credit report?
The Fair Credit Reporting Act stipulates that lenders to whom a consumer has applied for a loan can view credit reports
- for example, credit card companies and financial institutions supplying auto loans and mortgages. But the list
continues: landlords, utility companies, phone companies, hospitals, doctors, dentists, insurance companies, credit unions,
finance companies, banks, retailers, department stores, credit card companies, car dealers, mortgagers, investigators,
lawyers, courts - most anyone who can give the credit bureaus just cause can view your credit report.
How long does information stay in my credit report?
Public records and collection items stay on your report for 7 years with the exception of bankruptcies, which stay on
for 10 years. Unpaid tax liens remain for 15 years. Positive information remains indefinitely, although agencies can
remove it after 7 years. Inquiries remain for two years.
At what age do credit reporting agencies start recording a person's credit history?
At 18 years of age, your credit is compiled and reported to the credit reporting agencies.
Why should I check my credit report?
Just as you have medical and dental check-ups periodically, so should you check your credit report. Knowing what's in
your credit report arms you with the information you need - your credit standing - when trying to secure favorable
rates for a mortgage or other loan. Also, if you regularly check your credit report, you can guard against identity theft,
one of the fastest-growing federal crimes in the nation.
How often should I check my credit report?
With the explosive growth of identity theft, experts recommend checking your credit report as routinely as you check the
weather. That way, when there's a change you don't recognize, you can take steps to halt what could be illegal pilfering
of your personal information.
How do I dispute inaccurate information?
You may file a dispute by calling and writing the credit bureau that
reported the inaccurate information (send by certified mail, return receipt requested, and keep copies). The bureau will
then check with the original source. If this inaccuracy persists, add a statement to the credit report specifying why the
item is wrong. This dispute process can take up to 30 days.
What is a public record?
Information on tax liens, lawsuits, bankruptcies and judgments that relate to the consumer's debt obligations. Most public
record items are listed for 7 years including successfully completed Chapter 13 bankruptcies. Other bankruptcies
are listed for 10 years. Tax liens are listed for 7 years from the date paid.
What are collection items?
Collection items are accounts sent to a collection agency, which are listed in your credit report for seven years from the
date the account was 180 days delinquent with the original creditor.
What are inquiries?
Companies that have requested your credit file within the past two years. Companies that inquire for marketing purposes
do not affect your credit rating.
How long does it take for a closed account to be removed from my credit file?
The file will be updated in 30 to 60 days, but reportable information stays on 7 years from date of the last activity.
About Credit Scores
What is a credit score?
A credit score, calculated from variables in your credit report and other factors determined by the lending institution, is a
rating tool used by lenders to gauge an individual's creditworthiness.
What if I do not receive a credit score?
A credit score can't be generated if there's no information in a credit report, so individuals with little or no credit history
will generally not have a score.
To remedy this situation, consider applying for a retail, gas or secured credit card to establish credit. Then keep your
debt low and pay your bills on time to establish your credit history on a positive note.
What is the credit score range? What is the average credit rating?
Credit scores range from 350 to 850. The higher the number, the better the credit rating. A score in the 700s or higher is excellent, around 650 is a midrange score, and anything lower than 600 has room for improvement. What is the average credit rating? The national average score is 676.
Some statistics about the score distribution (percentiles):
- 90% of the US population is below 790
- 70% of the US population is below 755
- 50% of the US population is below 710
- 35% of the US population is below 670
- 15% of the US population is below 600
How does my credit score affect me?
Credit scores, calculated from such information in your credit file as total debt, types of accounts, number of late
payments, age of accounts, and number of inquiries, give lenders a subjective rating of your creditworthiness. Lenders
then consider this rating when deciding whether or not to extend you credit. It's in your best interest, therefore, to keep
your credit as robust as possible so you can secure favorable rates and terms. If your credit score is weak, you can
often strengthen it by minimizing outstanding debt, avoiding overextension, and limiting new credit applications.
How often does my credit score change?
Your credit score fluctuates as often as information in your credit file changes.
Do late payments affect my credit score?
Yes, late payments negatively affect your score - paying your bills on time is the single most important contributor to a
good credit score.
Do inquiries affect my credit score?
It depends on the type of inquiry. Inquiries for marketing purposes do not affect your score. These include consumer
requests for a credit report, lenders using credit information to review an account, or a potential employer looking over
someone's credit. Inquiries initiated by the consumer, such as mortgage, auto loan and credit card applications, however,
do affect your score because studies have shown that too many are a red flag for credit risk. Inquiries do not weigh as
heavily, however, as past payment history or number of delinquent accounts.
Does co-signing a loan affect my credit score?
Yes. Any loan or credit card account affects your score.
About Credit Monitoring Services
What is a credit monitoring service?
Credit monitoring companies are owned by publicly-traded major corporations. They use the latest encryption, consumer screening, and data security technologies to make sure that your information is protected. If you've been a victim of fraud, or want to avoid becoming a victim, then credit monitering services may be the right choice.
Won't signing up for a credit monitoring service hurt my credit?
No. Consumers have the right to look at their credit report without it affecting their credit or credit score. When you request your credit report it's called a "consumer pull" and has no affect on your credit. Only when you ask a possible creditor to inquire about your credit can it affect your score. For example, if you go out looking for a new car and you let a dealership request a copy of your credit report, that could affect your credit score because it implies you're looking to open new lines of credit.
Once I sign up, will I be alerted if someone tries to open a new credit account?
Depends. If you sign up for a credit monitoring service that only monitors one credit bureau, you will only receive alerts that affect that credit bureau. But if you chose a credit monitoring service that monitors all 3 of the credit bureaus - Equifax, Experian, and TransUnion - you will receive alerts that affect all these 3 credit bureaus. This issue highlights the value of three bureau monitoring. No matter which bureau is affected, a three bureau monitoring product should generate an alert.
What are monitoring alerts?
You receive a monitoring alert via email or text messaging if essential information has changed on your report. That way, you can identify fraudulent activity early in cases where credit activity is unfamiliar or unauthorized. Most credit monitoring services will also send out a Monthly All Clear email when no key changes have been posted to any of your three national credit reports in the past month.
How do I enroll for SMS Text Messaging alerts?
Nowadays most credit monitoring services have the option that let's you receive monitoring alerts via SMS Mobile Text messaging. Usually you can sign up for this option when you log into your account.
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