Category Archives: Credit Report

3 Major Credit Bureaus

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In the United States, there are 3 major credit bureaus. There are TransUnion, Equifax, and Experian. These three credit reporting agencies are responsible for amassing information on an individual’s credit history. They collect data from a number of sources called data furbishers.

Data furbishers may be creditors like banks or credit card companies, lenders, utility companies, collection agencies, and courts. Creditors and lenders will give TransUnion, Equifax, and Experian information on how much a consumer has borrowed and on how long it takes them to pay back the loan. Creditors and lenders will give the credit bureaus monthly updates about whether or not the consumer has paid their monthly bill on time. Most of them, however, only tell the bureaus about a late payment if the borrower makes their payment more than 30 days after the due date.

Utility companies usually only notify the 3 credit bureaus if a consumer is seriously in arrears in their billing arrangement. For instance, if they have to place a lien on a property to get an electric or water bill paid, they may notify the bureaus. However, if the consumer is only a month late, they will typically not submit a report. Collection agencies notify the 3 credit bureaus if a consumer owes a bill that has been placed with their office. However, not all collection agencies report all of their debtors. In addition, if a consumer makes a payment arrangement with a collection agency, the agency will usually not provide TransUnion, Equifax, and Experian with monthly updates on the payment arrangement. They will simply notify them when the bill is paid in full or settled for less than the full balance. The courts notify the agencies about public records.

The 3 credit bureaus create reports on each consumer, and they provide these reports to lenders, landlords and some other interested parties. These are what we call credit reports. These parties will look at the consumer’s borrowing and repayment habits. Then, they will determine whether or not they wish to engage in a financial relationship with that consumer. In addition, these parties may also look at the consumer’s credit score. The score is derived from taking data from the credit report and plugging it into a special algorithm. Using their formula, the 3 credit bureaus work to create a credit score for most consumers. However, the credit score that most lenders and creditors look at is not the one created by the credit reporting agencies. It is the one created by FICO (Fair Isaac Corporation). They are an independent organization that creates these scores using information from all of the reporting agencies. You can obtain a free credit report once an year from the 3 bureaus, but you need to pay a fee to obtain your credit score. Whether that’s your credit score from the 3 credit agencies or from FICO, you usually have to pay a small fee.

To ensure that TransUnion, Equifax, and Experian are fair with consumers, they are regulated by two governmental bodies. The Federal Trade Commission provides oversight for the bureaus. The Office of the Comptroller of Currency oversees the entities that provide data to the bureaus, and they try to ensure that the data is correct.

If a consumer wishes to see their credit report, they can contact any one of the 3 credit bureaus. According to the federal law, TransUnion, Equifax, and Experian must all provide consumers with at least one free report per year. In some states, they must provide consumers with a report every time something negative is noted on their report.

Free Annual Credit Report

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When consumers look for a free credit report, they often find many websites that offer a free report if the consumer signs-up for a free trial credit monitoring service. This is a legitimate way to get a free credit report. However, you will have to submit your credit card number, and once the free trial expires, the company will start to charge you for their credit monitoring service. It is possible to cancel the service before they start to charge your credit card. Ofcourse you can get an annual free credit report as an alternative.

According to the Federal government, the three credit reporting agencies must provide all consumers with a free annual credit report. These can be found at annualcrediterport.com which is the only website that is authorized by all three credit agencies to offer consumers their free annual credit reports. When a consumer visits this website, they will have to answer a few questions to verify their identity. For instance, they will have to enter their social security number, and then they may have to answer a couple of questions about their credit history. Typically, these questions have multiple choice answers, and they ask things like which street you lived on in the last four years, which bank gave you your car loan or other things. These questions help prevent fraud.

After you have entered your information, you will be directed to the websites for the three credit agencies. These are Experian, Equifax, and Transunion. Most of these reports contain no credit score. Thus, if consumers wish to get a credit score, they should anticipate spending a little bit of money. The most commonly used credit scores as those issued by FICO (Fair Isaac Corporation). They create a score by collecting data from all three of a consumer’s credit reports, and they then place this data into their special formula.OR you can opt for free trial offers from a credit monitoring service. You can see your credit score for free during the trial.

Consumers who do not like to order reports online can order their credit reports by calling 1-877-322-8228, or they can download a form from the Annual Credit Report website. This form should be filled out and mailed to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. Consumers can order all three reports at the same time, or they can order a free annual credit report from each agency at different times in the year. If they opt to order one report every four months, they can monitor their credit over the course of a year, and they do not have to worry about signing up for a free trial credit monitring service. However, if a consumer opts to do this, they should be aware that not all three reports contain exactly the same information.

Getting a free annual credit report is easy for most consumers. However, most of these reports contain no credit score. Some states also require the agencies to notify consumers when potentially negative marks are added to their reports. They send a written letter to the consumer. The consumer can easily opt to return this letter and request a free report this way.

How To Dispute Credit Report Error And Repair Your Credit Score

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Credit report errors are far more common, with nearly 70% of credit reports coming with errors. These errors can have a detrimental impact on your overall credit score, costing you higher in interest rates on loans and mortgages, job opportunities and other crucial facets of your life. Therefore, you need to know how you can dispute credit report error in order to fix credit and have a better score. First, you need to obtain your annual free credit report. You can do that thru annualcreditreport.com. Get all 3 credit reports because the information contained in one file is often be different from the other two.

So, what are the common credit report errors?
•  Identity theft, where someone uses your name to open and run an account
•  A retailer or a creditor misfiling information, especially about your credit card transaction
•  Inaccurate postings claiming that you missed some payment
•  Simple mistakes that confuse your name with a family member’s name or a stranger with the same name as yours
•  Double listing your loan information
•  Absence of some vital positive information

All these errors can have a severe impact on your overall credit score hence you need to dispute and have them corrected.

Importance of disputing your credit report errors

As already mentioned, errors, especially those in the form of negative items in your credit report, can significantly harm your credit score. Thus, apart from lowering your chances of securing loans, they can also affect your interest rates on insurance cover, mortgages and loans. A poor credit score resulting from errors in your report can also ruin your chances of securing any formal employment. In addition, the psychological trauma that comes with a bad credit score can be very devastating. In other words, a bad credit report courtesy of errors can affect the overall quality of your life, leading to frustrations and resentments. This is why you need to check your credit report regularly, identifying and fixing errors that may appear to be lowering it in order to have an impressive report.

Step-by-step tips on how to dispute a credit report error

Having known the kind of credit report errors that you are likely to encounter, you need to know what you should do once you have spotted them. First off, you need to know that it is within your right to dispute any errors that are appearing on your credit report. As such, the credit bureaus as well as your creditors are required by law to investigate every credit report dispute, including the source of the error. Therefore, if you discover an error in your report, you need to contact the credit bureaus that sent you the report informing them of the errors that you have identified in the report. These can be TransUnion, Equifax or Experian. If the error came from two or three of the bureaus, then you need to contact each of the bureaus that issued the erroneous report. Here is a step-by-step process of what you should do.

i. Get all the relevant information
The credit bureau will need proof that your credit report has errors. Therefore, you need to gather all the relevant documents, both original and photocopies, to back up your claims. You need to make a copy of your credit report highlighting all the erroneous entries that you want corrected. In addition, you need to know all your rights, incase the credit bureau agent or creditor tries to undermine and dismiss your dispute. Unless the credit bureau or creditor has valid reasons to justify that you are making frivolous claims, they are required by law to investigate and correct your claims within 30 days.

ii. Contact the credit bureaus that issued the report
Using a certified mail or letter, you need to contact the credit bureaus that issued the erroneous report. You need to highlight the error and why you believe this information is inaccurate. In your letter, include copies of your documentation to justify your claims. Never send the original documents. Also in your letter, ask the credit bureau to investigate and correct the errors. Ensure that you send separate letters to each of the bureaus that sent erroneous reports.

iii. Contact your creditors
While the credit bureaus are investigating your claims, ensure that you contact your bank, lenders, insurance company, mortgage company the credit card company and any other entity that provided inaccurate information to the credit bureaus. Send to these companies copies of everything that you sent to the credit bureaus, including a copy of your letter of dispute. In your letter to these entities, ask them to provide you with the records of the transactions that you are disputing in order to have them in your records.

Under the Fair Credit Reporting Act (FCRA) both the credit bureau and the entity that provided the inaccurate information must investigate and correct all the justifiable errors in your report. This should be done within 30 days from the time you file your complaint. Once the credit bureaus have received your letter of dispute, they will forward the information to the entities that provided inaccurate information. These entities will then have to investigate the disputes to figure out what went wrong. After their research, and establishing the source of error, they will provide the correct and accurate information to all the three credit bureaus in order to make changes to your credit report. Even if there is no error, these entities will still communicate to the credit bureaus, justifying their position and why they feel the disputed item should remain in your report.

Once the credit bureaus have received corrected information, they will provide you with an updated credit report, indicating all the corrections that have been effected. Once an error has been removed from your report, it cannot reappear again.

It is important that you look at your credit report at least once every year. This is worth your time and effort since it directly affects your credit score. A poor report courtesy of simple errors can cost you thousands of dollars in high interest rates on insurance, mortgage and loans. While correcting these errors can be stressful and time consuming at times, you need to remain focused in resolving them in order to fix credit and have a good score.

Everything About Credit Reports

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Credit reports are the main source for discovering whether a borrower is worthy of receiving a loan for a home, automobile, or other reason. A credit report is an official history of an individual’s financial activities. It contains information about one’s accounts, whether active or inactive, and shows if such accounts are consistently paid in a timely manner. In addition, it lists the total combined amount one owes to all his or her creditors, as well as the amount of credit that is still available to the person. Such information will stay on an individual’s credit report for seven years, with the exception of personal bankruptcy, which will be visible for ten years.

Credit reports also include lenders’ inquiries and legal actions such as repossessions, liens, and property foreclosures. The majority of reports also list information such as the account holder’s employment history, previous addresses, and other personal data. A person’s credit report can be accessed by landlords, insurers, employers, lenders and other individuals who are allowed to review such information.

Understanding Good and Bad Credit Scores

Every person’s credit score will fall somewhere between 300 and 850. A low score indicates a poor credit rating, while a high score shows that the individual is credit worthy. This is how banks and other lending institutions determine if a borrower is a good risk, or if there is a likelihood that the person will default on a loan. Credit scores between 680 and 700 are considered good. Those with a score of 700 to 750 will typically enjoy low interest rates on most loans. Those with scores of 760 or higher are regarded as very low risk customers by most lending institutions, and such consumers will find it easy to qualify for loans and other mortgages. In addition, those who have maintained good credit frequently receive offers for credit cards and other types of loans.

Major Consumer Credit Bureaus

The three main credit reporting agencies are TransUnion, Experian and Equifax. These three agencies gather similar facts concerning consumers’ payment practices and credit histories. However, all three bureaus have regions and cities in which they are more established than others, which gives them an advantage over the other two agencies in those specific parts of the country. This means that credit scores from the three bureaus will not always reflect the exact same information, making it possible for each agency to deliver a slightly different score. Certain banks and other lending institutions may rely on only one of the three credit reporting agencies when running credit checks on applicants, while others use all the companies and base their decisions on an average of all three scores.

Another fact of which many consumers are unaware is that each credit reporting agency uses a different method of calculation when determining one’s credit score. Such methods may include information such as the total amount owed to all creditors, and the amount of any open lines of credit still available for his or her use. Also typically included in such criteria is the number of times the person has paid a bill late, and the number of times he or she has applied for credit in the past twelve months. The latter will show up on the report as an inquiry, indicating that a bank or other lending institution has inquired about the person’s credit history to determine if he or she is a good risk for a loan.

Credit Reporting Errors

Numerous individuals are under the impression that credit reports are always up-to-date and accurate; however, this is not the case. Often, one or more of the credit bureaus forget to update a consumer’s report, or fail to remove negative information that is inaccurate or outdated. This can result in financial problems for the consumer, as well as the possible denial of future loans. It is never wise to assume that the credit agencies will keep consistently perfect records, as clerical errors occasionally occur in all types of record keeping. For this reason, one should keep his or her own records, and immediately report any discrepancies.

Reporting Errors and Suspected Fraud On Your Credit Report

A consumer should report errors on his or her credit report in writing to the agency that he or she thinks has recorded erroneous information. The letter should list each disputed item, with a detailed explanation of why he or she believes the information is inaccurate. Copies of any evidence one has should be enclosed with the letter, and the Federal Trade Commission–FTC–recommends mailing it registered or certified to have proof that it was received.

The credit bureau has 30 days to respond to the consumer’s letter, and one should review all correspondence upon receipt to ensure that disputed items have been erased, or an explanation has been given from the credit bureau regarding the information’s validity.

Identity Theft

With the recent increase in identity theft and other types of electronic fraud, it is essential that one check his or her credit history on a consistent basis and review the information for accuracy. This is the best way to prevent a problem from getting out of hand. Once an individual’s personal information has been stolen, another person can use the data to apply for loans and open credit card accounts, resulting in debt being accrued under the innocent party’s name. Unfortunately, the victim of such fraud is frequently held responsible for the debt unless he or she hires an attorney to rectify the problem. Often, the person must defend himself or herself in court, which can be a stressful and embarrassing occurrence for most individuals. For this reason, it is wise to view one’s report on a regular basis in order to head off problems before they begin.

The FTC states that the Fair Credit Reporting Act–FCRA–offers free yearly consumer credit reports from the three primary agencies to every consumer. Such a free credit report can be obtained through the Annual Consumer Credit Report website. This website offers free instructions for obtaining one’s report online, by telephone, or through the United States mail. Both the consumer’s date of birth, and his or her social security number are required when the request is made, and the FTC states that all three credit bureaus have permission to ask for any additional information they deem necessary to identify the person submitting the request. In addition, consumers can order copies of all three credit reports at the same time, or they can choose to stagger their orders throughout a twelve month period, such as ordering one from each bureau at four month intervals.

Benefits Of Acquiring Your Credit Report

There is a vast array of benefits associated with acquiring one’s official credit report regularly. Such benefits include the opportunity to discover and correct mistakes on the report, as well as to see exactly what various insurers, employers and lenders will see when the report is pulled. Certain individuals may even find signs of identity theft, which can be dealt with immediately, before it causes a major problem.

Credit Monitoring Services

There are various credit reporting agencies, lending institutions, and other organizations that offer credit monitoring services for approximately $15 per month. However, such rates can vary significantly from one agency to another. These services typically include access to credit scores and credit reports, as well as notifications to consumers about important changes to their credit histories. For example, a consumer will be notified if a new loan or credit card account has been opened under his or her name, or if a creditor has reported that one of his or her accounts has been closed or is delinquent.

Weighing the Pros and Cons of Credit Monitoring Services

It is important to understand that not all monitoring services are fool-proof. Many agencies of this type have been criticized for failing to provide protection from identity theft to their clients, which is the primary reason consumers enroll in such services. Sometimes, the reason that monitoring agencies fail to protect a consumer from identity theft or similar fraud is because they often report changes occurring at only one of the three major credit bureaus. However, as previously mentioned, a person’s credit history can vary considerably among the three companies, making it important to receive notification of new or suspicious information being posted on all three credit reports.

Regardless of one’s credit history, whether good or bad, it is important to understand the aforementioned information in order to make wise decisions concerning loans and other types of debt. It is also wise to visit the websites of each of the primary credit bureaus in order to familiarize oneself with how each one calculates credit scores. The internet is also a good source for learning more about how one’s credit history can affect his or her life and future.