Building a Better Credit Report
If you’ve ever applied for a credit card, a personal loan, or insurance, there’s a file about you. This file is known as your credit report. It is chock full of information on where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy. Credit reporting companies sell the information in your report to creditors, insurers, employers, and other businesses with a legitimate need for it.
They use the information to evaluate your applications for credit, insurance, employment, or a lease. Having a good credit report means it will be easier for you to get loans and lower interest rates. Lower interest rates usually translate into smaller monthly payments.
The Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness, and privacy of information in the files of the nation’s credit reporting companies. The FTC enforces the FCRA with respect to these companies.
Here are answers to some of the questions consumers have about consumer reports and credit reporting companies.
Q. Do I have a right to know what’s in my report?
A. You have the right to know what’s in your report, but you have to ask for the information. The credit reporting company must tell you everything in your report, and give you a list of everyone who has requested your report within the past year or the past two years if the requests were related to employment.
Q. What type of information do credit reporting companies collect and sell?
A. Credit reporting companies collect and sell four basic types of information:
- Identification and employment information: Your name, birth date, Social Security number, employer, and spouse’s name are noted routinely. The credit reporting company also may provide information about your employment history, home ownership, income, and previous address, if a creditor asks.
- Payment history: Your accounts with different creditors are listed, showing how much credit has been extended and whether you’ve paid on time. Related events, such as the referral of an overdue account to a collection agency, also may be noted.
- Inquiries: Credit reporting companies must maintain a record of all creditors who have asked for your credit history within the past year, and a record of individuals or businesses that have asked for your credit history for employment purposes for the past two years.
- Public record information: Events that are a matter of public record, such as bankruptcies, foreclosures, or tax liens, may appear in your report.
Q. Is there a charge for my report?
A. Under the Free File Disclosure Rule of the Fair and Accurate Credit Transactions Act (FACT Act), each of the nationwide credit reporting companies Equifax, Experian, and Transunion is required to provide you with a free copy of your credit report once every 12 months, if you ask for it.
Q. How do I order my free report?
A. The three nationwide credit reporting companies are using one website, one toll-free telephone number, and one mailing address for consumers to order their free annual report. Do not contact the three nationwide credit reporting companies individually. You may order your free annual reports from each of the credit reporting companies at the same time, or you can order them one at a time. The law allows you to order one free copy from each of the nationwide credit reporting companies every 12 months.
Q. What information do I have to provide to get my free report?
A. You need to provide your name, address, Social Security number, and date of birth. If you have moved in the last two years, you may have to provide your previous address. To maintain the security of your file, each nationwide credit reporting company may ask you for some information that only you would know, like the amount of your monthly mortgage payment. Each company may ask you for different information because the information each has in your file may come from different sources.
Q. Are there other situations where I might be eligible for a free report?
A. Under federal law, you’re entitled to a free report if a company takes adverse action against you, such as denying your application for credit, insurance, or employment, and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the credit reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft. Otherwise, any of the three credit reporting companies may charge you up to $10.50 for another copy of your report within a 12-month period.