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Disputing Incorrect Information on Credit Reports
Reading credit reports can be confusing. Before you assume there is an error, make sure you are interpreting the information correctly. The good news is that you can effectively dispute errors. Keep records of all your telephone conversations and correspondence. Get the name, title, and telephone/extension number of the person with whom you are speaking. All three of the large credit bureaus offer tools to register free online credit report disputes. The Federal Trade Commission (FTC) also offers a publication called “How to Dispute Credit Report Errors” for free on its Web site.
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Ignorance Is Not Bliss
If you have credit cards, even just one credit account, you need to pay attention to the big picture. It takes very little time to damage your credit score and much longer than that to fix it. Making your payments on time and keeping your balances low is only one piece of the puzzle.
In order to put the whole picture together you need to be aware of everything that goes on under your name and your social security number. Identity theft and credit card fraud are more common today than ever. The first year you obtain your very first credit account, you should be requesting regular credit reports, too.
If you start off on the right foot it is much easier to stay in good shape. Ignorance is not bliss, and if you do not pay attention and start off right, you will spend many hours to undo the damage. With the ease of use and ability to get an instant credit report online, anyone with credit accounts should be doing so. No one else is going to protect your score; it's all up to you.
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Disputing Credit Report Errors
Consumers should check online credit reports on file with Experian, Equifax, and TransUnion regularly to ensure that the information the reports contain is accurate. The Fair and Accurate Credit Transactions Act, or FACTA as it's called, makes it easier to dispute incorrect information in your credit report. Consumers can deal directly with the credit bureaus to dispute errors. Each of the big three credit bureaus offers online, telephone, and mail channels through which to pursue disputes. You can visit the company Web sites for more information. Regardless of whether you choose to deal with the credit bureau or directly with the business, you should dispute incorrect information in writing, and you should keep copies of everything. And remember, fixing an error at one credit bureau does not mean it will be corrected at the others. If the incorrect information is included in more than one bureau's database, you will need to pursue your dispute with each bureau individually. For more information on how to dispute inaccuracies in your credit report, visit www.privacyrights.org. There are links to government publications and other resources that will help you iron out any problems.
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3 Major Credit Reporting Bureaus
There are three major credit reporting agencies in the United States and each is just as important to you as the next. You are entitled to one free credit report from each of the bureaus every 12 months, but when you choose to request them is up to you.
You could request your report from one company, then the next company four months later and the last four months after that. This way you get a free credit bureau report every four months and are able to track changes over time.
The three bureaus are Equifax, Experian and TransUnion. Each company allows you to request your credit report via the Internet at their Web sites or by telephone. The Web sites are:
An alternative to constantly going back to their sites or calling for free credit reports is to use a company like IdentityGuard.com, which will request reports from all three agencies for you, as well as offer other safeguards against credit card fraud and identity theft.
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Checking Your Own Credit Report
Not only can you check your own credit reports, you should check them regularly. You can order directly through Equifax, Experian, TransUnion, or any number of online credit report companies. Checking your own credit reports will not negatively impact your credit score. Keep in mind, though, that if you order directly, you will be charged a fee. If you'd rather receive a free credit report, you can order an annual credit report from each of the three big credit bureaus at www.annualcreditreport.com. When you check your credit reports, make sure it is error free. Sometimes information from other individuals can be inserted into the wrong record.
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Updates To Your Credit Report
Banks and creditors typically report to the three major credit reporting bureaus, Experian, Equifax and TransUnion, once a month. These are compiled into approximately 4 major updates to your credit report information each year.
However, in other ways your credit report is updated practically every day. If you apply for a line of credit the lender will make an inquiry. That inquiry is almost immediately added to your credit report.
So while a late payment might take up to 30 days to show up on your report, it is still constantly being updated each day with other forms of data.
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About Credit Reports
A credit report is a compilation of information that serves as a persistent record of how you use, abuse and manage your credit responsibilities. It includes basic information about you, such as your name, address, telephone number, Social Security number, date of birth, and employment history. It also includes information on your credit payment history as well as public information such as tax liens, court judgments, and bankruptcies, if any. Credit reports are used by potential businesses and lenders to help determine your creditworthiness. If your credit report is generally positive, you will most likely qualify for better terms on any credit for which you apply. The federal government recently enacted legislation allowing consumers access to a free credit check once every 12 months from each of the three main credit bureaus. For more information, or to get information on an free instant credit report, visit www.annualcreditreport.com.
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What Lenders Look For In A Credit Report
It is important to understand what a lender looks for when they check your credit report. While credit history is very important and weighs heavily on a creditors decision to approve or deny you, it is not the only thing they look at.
A lender wants to know what your income is and how much of that income is needed for bills and other expenses. This includes other credit accounts, rent or mortgages payments, and other monthly expenses that are ongoing. The amount of your income you have left after your expenses will show them whether or not you can afford to take on more credit.
Then they look at your assets, if you have any. This includes any property you own, bank accounts, valuable items, etc. These can potentially be used as collateral to get a loan or line of credit.
So when going through your credit report, a lender wants to know if you can manage your debt, are not too far into debt, and have the ability to pay back whatever you borrow.
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About Credit Scores
A credit score is a numeric value that most commonly ranges from 300 to 850 and that is calculated based on a number of different factors. The single-most important factor in determining your credit score is your past repayment history. Credit reporting data is maintained by the credit bureaus on more than 170 million Americans. Credit scores are calculated directly based off current credit data, then subsequently pulled by lenders. A score does not exist until they are ordered by a lender or consumer. Since there can be errors in the information contained in a credit report and the corresponding credit score, personal finance and identity theft experts recommend that you check your credit scores all three credit bureaus at least three to six times a year. Federal law entitles consumers to a free credit report and score from Equifax, Experian, and TransUnion once every 12 months.
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Credit Cards and Identity Theft
Credit card companies recognize the threat that identity theft poses to consumers and do take steps to protect their customers. For example, many credit card companies monitor usage patterns by consumers. If unusual charges appear on the account, the company may temporarily freeze the account and contact the cardholder to see if the charges are legitimate. Examples of unusual charges include charges at vendors outside the geographic region in which you normally use the card or a big-ticket purchase when you normally use the card for smaller purchases. Most companies also offer other credit card fraud protection services, such as issuing virtual numbers for online purchases. Your credit card company's Web site should include a full description of the identity theft protection services it offers.
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