CREDIT REPORT BASICS
Credit Report Information: What appears on a credit report
Specific information regarding your identification and financial history are contained in your credit report. Your credit report is often referred to as a ‘credit file’ or a ‘credit history.’ One of the underlying purposes of maintaining a credit report of your financial behavior is efficiency for the lenders when reviewing your credit history. This allows lenders to efficiently make decisions regarding whether or not to lend you money or extend you a credit account. Your credit report typically contains four specific pieces of information.
Federal Law, including HIPPA, prevents disclosure of certain medical information typically related to mental, physical, or behavioral health conditions. Even though the credit bureaus do not collect this specific information, they will report the names of data furnishers which report your payment history, i.e., “Regional Hospital.” The data displayed on the report regulated to medical payment information. Your report will also include any consumer statements made at your request.
Bankruptcy filings usually appear on your credit report for up to 10 years; unpaid tax liens remain up to 15 years; other public records may appear for up to 7 years. Information found on the public records, such as overdue child support, may be included on your report depending on the laws of your particular state.
Credit reports include specific account information, such as the credit limit, loan amount, balance, monthly payment pattern and history; as well date the credit line was opened. Additional information such as the names of joint account holders and co-signors may also appear on your report.
Positive, Active credit reporting information may appear on your report indefinitely, while negative items and information tend to appear for up to 7 years.
Inquiries by creditors who have viewed your credit report information will also appear on your credit history. Please be aware, that often creditors pull your credit report without sufficient authorization, which does penalize your credit score. The Fair Credit Reporting Act allows your active creditors to view your information without prior approval so long as they have a permissible purpose. The definition of permissible purpose is not clear and this often leads to numerous abuses.
The major credit bureaus, Experian in particular, do provide your information to creditors inquiring for the purposes of extending a pre-approved credit offers. They claim this does not impair your ability to obtain credit. However, these ‘policy makers’ at the credit bureaus have never had to pay more money for a car loan based on small problems with credit.
The personal information found on your credit report includes your name, current and former addresses, phone numbers, social security number, date of birth, and employment information.
When you formally dispute the items found on your credit report, or file what is called, a “Statements of dispute,” this should be placed on your record by the bureaus. Disputes should also be reported by your creditors and will drop off your report only once the dispute is settled.
Any disputes between you and the creditor regarding the account status should appear on your credit report. The Fair Credit Reporting Act (FCRA) requires that these statements are added at your request. Be careful regarding the language in any statement submitted as they will be posted to your account and will not exclude any confidential information you put in the statement.
Data regarding race, religion, medical history, political views, personal lifestyle choices, friends, family, criminal history and other unrelated and irrelevant information should also not be included. Information about your checking and savings accounts should not appear on your credit report.
Review Your Credit Report
Potential lenders always review your credit prior to approving your new credit card, car loan, or extension of credit. In many instances, particularly at car dealerships, they review your credit without your permission. Any review of your credit by a lender or creditor will have a negative impact on your credit score. Regularly checking your credit prior to and after applying for credit is the first step to maintaining a healthy credit score.
Regularly reviewing your credit report will help you budget and plan for the future, assure the accuracy of the information in the report, and ultimately save you money through lower interest rates on loans based on improved credit scores.
Consumers are entitled to 1 free credit pull from the three major bureaus every 12 months. There are numerous free credit report sites on the internet to help you pull your credit. However, your free credit report limits you to a small window when viewing and monitoring your credit report and score. We highly recommend purchasing a credit report plan and consistently viewing your credit on a regular basis for maximum results.
Correcting errors on your report
Consumers can challenge any inaccuracies that appear on their credit reports. Federal law requires that the three major credit bureaus, as well as your creditors, comply with your requests to check and challenge potentially inaccurate information.
Create a Positive Credit History
Essentially, the purpose of your credit report is top show potential lenders and creditors how responsible you have been managing your financial affairs over a specified period of time. Positive information can remain visible indefinitely, while negative information usually drops off after a certain period of time. The good news is that it is never too late to begin building and fixing your credit. There is no credit that cannot be saved given enough time, timely payments, and effort. Tips for creating a positive credit report and history include:
Print clearly when applying for credit
Providing your complete name on every application, along with complete, consistent, and accurate identification on your credit applications ensures a correct credit history from day 1. This type of accurate disclosure helps prevent inaccuracies, incomplete information, and the mixing of your credit report with other similarly named people.
Obviously, paying your bills on time, over time is the best strategy for improving your credit. Most lenders look at the most recent information on a report. Lenders may weigh a recent history of on time payments (last 2-4 years) more heavily than older late payments. Paying on time is always the best option and strategy for healthy credit.
Living within your means is a sound philosophy that has withstood the test of time. Living within your means makes on-time payments much more likely.
If you begin to fall behind on your payments:
Contact your Lenders
Select lenders may work with you to set up alternative payment plans, schedules, and interest rates if you notify them that you cannot make the current payments. Proceed with caution as most lenders have no ethics and are always on the lookout to rip off unsuspecting and undereducated consumers.
Use Cash until you Master Credit
Seeking out reputable professional services, such as attorneys, accountants, and financial planners can prove to be very helpful if you are not good at managing your finances. In many instances, the money you spend actually makes you money in the form of savings.
Educate yourself. Knowledge is King.
Don’t Trust your Creditors or the Credit Bureaus
History tells us that creditors, collection agencies, and the credit bureaus themselves are not to be trusted.
Credit reports contain a wealth of valuable, confidential information about you. Your Social Security number, date of birth, current and previous addresses, telephone number (including unlisted numbers), credit payment status, employment, even legal information are contained within the pages of your credit reports. The most important step you can take to ensure accuracy of information and to safeguard your privacy is ordering your credit report once a year and knowing your credit reporting rights. The federal Fair Credit Reporting Act (FCRA) and various state laws restrict who has access to your sensitive credit information and what uses can be made of it. These federal and state laws also set the standards for the operation of consumer reporting agencies, called “CRAs” or “credit bureaus.”
There are three main credit bureaus: Equifax, Experian and Transunion. You will sometimes read about a fourth CRA, (Innovis Data Solutions www.innovis.com), but for now at least, it is not a major player, and this guide focuses solely on the “big three”).
Equifax 800-685-1111 www.Equifax.com
Experian 888-397-3742 www.Experian.com
Trans Union 800-888-4213 www.Transunion.com
To summarize your credit reporting rights, you have the right to:
- Obtain a copy of your free, annual credit report.
- Know who else has received a copy of your report.
- Dispute negative information.
- Explain circumstances regarding accurate but negative information.
- “Opt-out” to prevent credit bureaus from using your information for marketing.
- File a lawsuit to enforce your rights.
Can Credit Reporting Agency deny credit applications?
CRAs do not make decisions regarding a consumer’s creditworthiness. Rather, the CRA compiles reports of what your file contains and passes that along to the potential credit grantor. Credit decisions are, in fact, generally made based upon a number of factors that comprise a “score.” Inquiries made in connection with your applications for credit may also be a factor in your score. If, for example, you have applied for several credit cards or loans in a short period of time, this may result in a lower score. Inquiries made in connection with pre-approved credit offers or those you make yourself do not result in
a reduced score.
How do credit scores affect my application?
The practice of credit scoring is widespread and growing. Until recent years, consumers have seldom gained access to their credit score and have not been able to learn the factors that went into the scoring process. But a 2000 law in California gave mortgage applicants a right to see their credit score (California Civil Code 1785.10, 1785.15-1780.20). Since then, the credit industry voluntarily loosened its grip on the credit score. Further, the recent FACTA amendments to the FCRA gives you new rights to know your credit score as well as an explanation of the factors that determined the score.
In March 2006 the three national credit bureaus announced a joint scoring model called the VantageScore which sets a scoring range different than the FICO score.
Is there anything that cannot be in my credit report? How long can information be reported?
Certain pieces of personal information cannot be in your credit report:
- Medical information (unless you give your consent).
- Notice of Bankruptcy (Chapter 11) more than 10 years old.
- Debts (including delinquent child support payments) that are more than seven years old.
- For California residents, records of arrest, information, or misdemeanor complaints must be removed after seven years. But under federal law, records of criminal convictions may remain on a credit report indefinitely.
- Age, marital status, or race (if the request is from a current or prospective employer).
Certain kinds of information may remain on your report indefinitely. If, for example, you are applying for credit, insurance or employment above the dollar limits noted below, information can be reported beyond the usual seven- to 10-year deadlines.
- A credit transaction involving, or which may be expected to involve, an amount of $150,000 or more.
- Information about a job with a salary of more than $75,000.
- An application for credit or life insurance for more than $150,000.
- Tax liens that are not paid
Tampa Credit Defense and Credit Repair Lawyers
To discuss your credit issue with one of our experienced lawyers at your free consultation, call us at 866-479-6946, or contact us online.