- Credit Report vs. Credit Score vs. Credit File Disclosure
- Know your Rights
- In case of a Credit Fraud
- Pay to improve Credit Report - a myth
- Related Links
As they say 'in US if you have no credit history, you have no history'. It is such an integral part of life that without it you are nothing. Whether you are applying for a credit card, house loan or any other loan, buying a car or even getting employed- there is a check on your credit. Good credit does wonders for you, while a bad credit can be your doom. Besides your own mistakes, identity thefts and other such issues that are out of your control wrecks credit history.
Most of the time people are not even aware of their financial state, and they end up paying a big price for negligence. That is the reason why people should be aware of their credit history. This article explains why is it important to be in touch with your credit history, where to obtain your Credit report, what to do in case of bad report and basic things to be kept in mind for a safe future.
Have you ever wondered what a credit report really is?
Well, it is basically an information database on YOU. It includes information such as
- where you live
- how you pay your bills
- how you repay loans
- how much credit you have available
- what are your monthly debts
- whether you've been sued or filed for bankruptcy
All this information can help decide whether you are a good credit risk or a bad credit risk. Although the report does not say whether you are a good or bad credit risk -- it provides enough data to make a decision on you. The things that don't appear on most credit reports are:
- Bank Account balances
- Criminal Records
- The status of your health
Information about your activities is compiled from various sources. Credit bureaus, also known as Credit Reporting Agencies (CRAs), collect information about you from:
And then sell the report to :
- other businesses
Anyone who purchases this report is likely to use it to evaluate your applications for credit, buying a house, buying a car, or renting a home. As per popular market studies, there are over 1,000 local and regional credit bureaus around the country that gather information about your credit habits directly from your creditors.
If the report shows anything negative on you (not paying your bills on time or under heavy debt), you may not get approved in future.
Credit Report vs. Credit Score vs. Credit File Disclosure
Many people tend to confuse between credit report and credit score. Although people think the two as same, in reality these are totally different. A credit report is a report on you and is used by lenders to evaluate if it is safe to give you credit and to know your payback capacity.
Credit scores are based on formulas that use the information in your report, but they are not a part of your report. The higher your credit score, the more likely you are to repay your debts on time, and the more likely you are to receive credit on favorable terms.
A credit file disclosure provides you with all of the information in your credit file maintained by a consumer reporting company that could be provided to a third party, such as a lender. It also includes a record of everyone who has received a consumer report about you from the consumer reporting company within a certain period of time ("inquiries"). In addition, it has information that is not included in a consumer report about you to a third party, such as the inquiries of companies for pre-approved offers of credit or insurance and account reviews, and any medical account information.
How can you order a credit report? Knowing your Rights
1. Requesting copy of your credit report
As per the market analysts, you can request copies of your report from the three major credit bureaus regularly so that you can correct any inaccuracies in these report. You must take control of your own credit information. The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies - Equifax, Experian, and TransUnion - to provide you with a free copy of your credit report, at your request, once every 12 months.
When you order, you need to provide your name, address, Social Security number, and date of birth. To verify your identity, you may need to provide some information that only you would know, like the amount of your monthly mortgage payment.
2. Free Annual credit Report
You can order your free annual credit report online at annualcreditreport.com (the only online source authorized to do so). Please beware of other sites that may look and sound similar or offer free reports, but only with the purchase of other products. While consumers may be offered additional products or services while on the authorized website, they are not required to make a purchase to receive their free annual credit reports. You may also obtain the Credit Report by calling 1-877-322-8228, or by completing the Annual Credit Report Request Form and mailing it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
3. Who can access your report
FCRA also specifies who can access your report and for what reasons. Your credit report can be viewed by people you have initiated business with, such as lenders, landlords, credit card companies and other businesses. You can also give potential employers written permission to view your report. But there must be a permissible reason to view your report.
4. Getting information corrected
You have the right to have inaccurate information corrected or deleted. A credit-reporting agency must correct or delete inaccurate information from your credit file within 30 days after you dispute the item. The agency must delete information it is unable to verify within 30 days after you dispute the item. However, if it is later able to verify the information, it may reinsert the item if it gives you written notice that it has done so. But it is under no obligation to remove accurate, negative information unless it is outdated.
5. Suing the credit rating agency
Under FCRA, you have the right to sue a credit reporting agency, a furnisher of information (in some circumstances), or a user of your credit report-if they violate your rights. The FCRA is designed to promote the accuracy, fairness and privacy of information contained in the files maintained by consumer reporting agencies. You can find the complete text of the FCRA at the FTC website. In addition to your rights under the FCRA, you may have additional rights under state law; you can contact the attorney general's office of your state, or visit their website, to learn those rights.
6. Removing yourself from a contact list of credit rating agencies
Many companies get your name and address from credit bureaus in order to send you offers for pre-approved credit cards in the mail or via telemarketing call. If you don't want to have your name sold to these companies, you can "opt out" by either writing to the three major credit bureaus or by calling (888) 5OPTOUT (888-567-8688). This will remove your name for two years from mailing and telemarketing lists that come from all the three CRAs.
In case of a Credit Fraud
If you have been a victim of Identity theft, you have the right to ask the CRAs to place "fraud alerts" in your file to let potential creditors and others know that you may be a victim of identity theft. A fraud alert can make it more difficult for someone to get credit in your name because it tells creditors to follow certain procedures to protect you. It also may delay your ability to obtain credit. You may place a fraud alert in your file by calling just one of the three nationwide consumer credit reporting companies.
Also, it may take several tries to clear your Credit Report of any inaccurate or outdated information, so don't get discouraged. Experts advise always to document everything from mail to communication with the agencies.
Pay to improve Credit Report - a myth
Federal Trade Commission (FTC) cautions consumers to be wary of companies that make claims regarding credit repair. These companies, commonly called credit clinics, don't do anything for consumers that consumers cannot do for themselves at little or no cost. Beware of any organization that offers to create a new identity and credit file for you.
The FTC and state attorneys general have filed actions against those who pursue these fraudulent practices. Beware of organizations that guarantees to remove late payments, bankruptcies, or similar information from a credit report, and charges a large amount of money to do so. Keep away from organizations that are reluctant to give out their address or one that pushes you to make a decision immediately.
It is important to keep a track of your financial state, and keep in touch with your credit report. A copy of your credit report can help you ensure that all the information about you is accurate, complete, and up-to-date; and this act can do wonders when you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job. It can help you guard identify theft. Remember inaccurate information like that could affect your ability to get credit, or even a job.