Understanding
your Credit Report
What Exactly Is a Credit Report?
Once again… there are only 3 major credit bureaus in America; Equifax, Trans Union, and Experian. All the individual companies that extend credit submit their customer’s payment history and status of their accounts to one, or all three, of these bureaus. From this information these 3 credit bureaus in turn complies a report on you. This is what everybody knows as the credit report. One big misconception that nearly everyone has this is report belongs to you. This is a report that the credit bureau created and they are the owners of the credit report. There are numerous federal laws that control what’s on it… how it is reported… how it is used… who gets to see it… etc. etc. But the report belongs to the credit bureau.
A consumer credit report is a document that contains a factual record of an individual's credit payment history. Any company that grants credit is permitted by law to review your credit report to objectively determine whether to give you the credit. This can be anything from things we obviously like credit cards and card loans all the way to insurance policies, apartment rentals and even employment applications.
There are approximately 205 million credit-active people in the United States who have charge accounts, credit cards, car loans, student loans, home mortgages, etc. As people pay their bills, nearly all of the individual business and companies will report the payment information to the credit bureaus. So nearly all of the information in your credit report comes directly from the companies you do business with.
It is important that everyone knows exactly what is on their credit report. There are many services available where you can order your credit report online and get instant access to view it.
There also are special types of credit reports that are created for specific purposes:
Consumer credit report contains four types of information: identifying information, credit information, public record information, and inquiries.
Identifying information includes:
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A Mortgage Report. A mortgage report is a special credit report that lenders use prior to deciding whether or not to extend you a home loan. Nearly all of these types of reports are a compilation of all 3 of the major credit bureaus. The mortgage credit reporting company purchases credit reports from the credit bureaus, combines them, and manually verifies specific information such as employment, credit account balances, and public record information.
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An Employment Report. An employment report is a modified credit report that helps potential and current employers make hiring and promoting decisions. The employment report contains much of the same information about your loans and credit cards that regular credit report has listed. However, your marital status, year of birth, and account numbers are omitted from the employment report.
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Your name
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Your current and previous addresses
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Your Social Security number
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Your year of birth
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Your current and previous employers
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If you're married, your spouse's name
Credit information includes credit accounts or loans you have with:
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Banks
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Retailers
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Credit card issuers
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Other lenders
Public record information includes any information that's contained in state and county court records, like:
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Bankruptcies
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Tax liens
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Monetary judgments
Who can the Credit Bureau give my information to?
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Credit bureaus can release your credit information only to people with a legitimate business need, as recognized by the Fair Credit Reporting Act (FCRA). For example, a company is allowed to get your report if you apply for credit, insurance, employment, or to rent an apartment.
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In addition to the uses described above, lenders and insurers may use information in your credit file as a basis for sending you unsolicited offers. This is known as "prescreening." However, you have a right to opt out of these offers. The toll-free number - 1-888-567-8688 - is the "opt-out" line for the major credit bureaus for "prescreened" offers only.
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As of July 1, 2001 the Gramm-Leach-Bliley Act (GLB), requires all financial institutions to give you notice of their privacy policies and a way for you to opt-out of some of their information-sharing practices. In other words if a bank, credit card company or any institution you do business with, shares your information, puts you on a lists and sells it… you have a right to say no. You don not wish your information to be shared, you want to be removed from any such lists. You may recall getting mailings or statement inserts from your financial institutions, creditors, insurance companies and brokerage firms about this. That July 1 date was a deadline for them to notify you. But you the consumer can contact the financial institutions at anytime to opt-out under GLB.
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The FTC strongly advises that you not give out personal information on the phone, through the mail or over the Internet unless you know who you're dealing with. Identity thieves may pose as representatives of banks, Internet service providers and even government agencies to get you to reveal your Social Security number, mother's maiden name, financial account numbers and other identifying information. Legitimate organizations with which you do business have the information they need and will not ask you for it.
