Finance for Dummies – Credit Reports

Your credit report is used by a lot of businesses: utility companies, mortgage lenders, prospective employers, banks, and others.  It is vital that you understand what information that is contained on your credit report and the companies that gather that information, credit bureaus.

What information is on my Credit Report?

Your credit report is a record of your financial history and contains:

  • Inquiries – List of individuals and businesses that recently requested information about you.
  • Public Record – Public records such as bankruptcy, court judgments against you, and any tax liens.
  • Your Identity – Name, address, social security number, date of birth, and employment information.
  • Credit History – Credit card accounts, car loans, mortgages, and student loans.  Typically includes credit terms, payment history, and outstanding balance.

Why is my Credit Report Important?

Your credit report is important for a number of reasons:

  • Employers may use your credit report to make a hiring decision.
  • Lenders may use credit report information in making a decision to extend credit to you and what interest rate to charge.
  • Insurance companies use your credit history to make decisions about whether to insure you and what rate to charge.
  • Landlords use your credit history to determine whether you will make a good tenant and pay your rent on time.
  • Telephone and utility companies use your credit history to decide whether to provide services.

Who collects and reports information about my credit history?

Currently there are three major companies that collect credit information: TransUnion, Experian, and Equifax.  These companies collect credit information about you and then share it in the form of a credit report to individuals and businesses you are requesting credit or services from.

Where do the credit bureaus collect information about me?

Credit bureaus obtain information from public records like county tax records or court records.  They also get information from your credit card issuer, mortgage company, bank, and auto loan company. Credit bureaus get information from different sources, this is the reason your credit report can contain different information.

Who is allowed to see my credit report?

Because credit reports contain sensitive personal information access is controlled.  Credit bureaus can provide your credit report to the following:

  • Government agencies to determine your eligibility for services or benefits
  • Lenders you are asking for credit or have granted you credit.
  • Utility companies, telephone, and cell phone companies that provide you service.
  • Insurance companies that are considering offering you a policy or already have insured you.
  • Prospective employer or current employer, only if you give your permission
  • As required by Federal Grand Jury Subpoenas or Court Order
  • Anyone who has a legitimate business need for information such as your bank or future landlord.

What can I do if I am denied credit or employment because of something in my credit report?

The company that is denying you credit or employment is required to notify you and provide you with the name, address, and phone number of the credit bureau that was the source of the information used to deny you credit.  You may request a free credit report from this credit bureau within 60 days of receiving notice. If after reviewing your credit report you identify an error, you may dispute the information and request the information be corrected. (See below for details about correcting errors.)

Lenders also use your credit report to set the terms of the credit they offer you.  If you are offered terms less favorable (higher interest rate for example), because of information contained in your credit report, the lender may give you a notice with information about the credit bureau that provided the information used in the decision.  Again you may request a free credit report from the reporting credit bureau within 60 days of receiving notice.

 How long does information stay on my credit report?

Information such as late payments stays on your credit report for seven years.  Personal bankruptcy stays on your credit report for ten years.  Unpaid judgments or lawsuits stay on your report for seven years or until the statute of limitations runs out, whichever is longer.  Criminal convictions can stay on your credit report indefinitely.

How can I correct errors on my credit report?

If you determine information on your credit report is inaccurate you may dispute the information and request the information be deleted or corrected.  To correct the information you should contact the credit bureau that provided the report or the company that provided the incorrect information to the credit bureau.

When disputing information on your credit report be sure to:

  • Provide your name, address, date of birth, and social security number
  • Provide documentation about the inaccurate information such as a copy of an official consumer complaint, account statements, identity theft or fraud affidavit, or police report.
  • Provide specific details about the inaccurate information and why you are disputing it.

What is the process to correct information on my credit report?

If you submit a dispute directly to a credit bureau or a company that provided the inaccurate information to the credit bureau, your dispute generally must be investigated within 30 days.  If additional information is provided during the investigation, the investigation period may be extended and additional 15 days.  You will receive written results either from the credit bureau or the company that provided the disputed information once the investigation is completed.

If the investigation determines the information is inaccurate, the information provider must notify all three credit bureaus so the information can be corrected.  You are entitled to a free copy of your credit report in addition to your annual free report.  You may request the credit bureau send a notice of any correction to anyone who received a copy of your report in the past six months.  You may have a copy sent to anyone who received a copy or your credit report regarding employment.

What can I do if the investigation does not resolve my dispute?

You may ask that a statement of the dispute be included in your future credit reports.  You may also ask the credit bureau to provide this statement to anyone who received a copy of your credit report in the past.

How can I get a free copy of my credit report?

You can get a free credit report every twelve months from each of the three major credit bureaus: Equifax, Experian, and TransUnion by visiting www.annualcreditreport.com or calling (877) 322-8228


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28 Responses to Finance for Dummies – Credit Reports

  1. SLahti 08/07/2013 at 10:39 am #

    Yes, many people don’t know that they can get a credit report from each of the three major credit reporting agencies at annualcreditreport.com. But they can only get a free one once per year. And you can’t get a free score there or monitoring services.

    Many people do like the convenience of getting their report whenever they want as many times as they want. And that is where the paid services come in. Most paid services offer a free score or a cheap credit report (they can’t offer an online credit report for free) to get you to try their credit monitoring services.

    Credit monitoring isn’t for everyone, but for those that want the peace of mind that comes with these services, they are often worth it. It’s kind of like having an alarm system for your credit profile. If it goes off, you decide if the intruder is welcome or not.

  2. Photon0312 03/21/2012 at 10:33 am #

    I’m so glad you added the contact information to get your credit score – so many people are tricked into thinking companies like FreeCreditReport (dot) com are actually providing you with your information, instead of selling you a service!

    • Paul 03/21/2012 at 10:39 am #

      Great marketing on their part but many consumers are being misled and end up purchasing a credit report when they could receive them for free annually.

  3. Super Frugalette 12/18/2011 at 12:44 am #

    Thanks for the comprehensive tips. Time to look at my credit report again.

    • Paul 12/18/2011 at 7:47 am #

      Anytime SF, thanks for stopping by!

  4. Shaun @ Money Cactus 12/04/2011 at 5:17 am #

    I’ve actually never checked out my credit report, perhaps I should take a look to see that everything is in order? Thanks for the tips.

  5. JP @ Novel Investor 12/03/2011 at 4:30 pm #

    I usually get mine checked out every year. Haven’t had any major issues yet. Thanks for the reminder.

    • Paul 12/03/2011 at 11:44 pm #

      It’s free and it is worth the time it takes to look over you report.

  6. YFS 12/01/2011 at 11:50 pm #

    The method choosen to correct the credit report doesn’t quite work. The credit agencies 99% of the time simply believe your creditors. I use the debt verification/validation while filing the dispute. Inquiry with the credit agencies and via written correspondence and with the creditor all while citing specific FDCRA information. This works all the time to fix inaccurate information and fairly quickly.

    • Paul 12/03/2011 at 9:06 am #

      The method above is per Fair Credit Reporting Act (FCRA) guidelines and is what the consumer and creditor are required to do under the law. If the source of the error is from the reporting agency, the reporting agency is required under FCRA to prove the debt is yours, debt validation as you stated. I think we are both talking about the same process. 😉

  7. My University Money 12/01/2011 at 10:19 pm #

    It’s actually a little eerie how much information credit bureaus have on you. What I can’t understand is that we have all this information, yet there are still companies lining up to offer credit to consumers, but not to small businesses. It makes no sense to me.

  8. Miss T @ Prairie Eco-Thrifter 12/01/2011 at 10:23 am #

    I order a report once a year to make sure things are all in tact. It works out well. No issues yet which is great.

    • Paul 12/01/2011 at 4:11 pm #

      Obtaining a free credit report is easy and well worth the time and effort. The consequences for not checking your credit report can be devastating.

  9. cashflowmantra 11/30/2011 at 10:11 pm #

    A nice little series in general and nice write up on credit reports. Mine had some of my dad’s information on it years ago so it helps to pay attention and check it every so often.

    • Paul 11/30/2011 at 10:45 pm #

      That happened to my Wife and it was a pain to fix. Glad you like the series!

  10. World of Finance 11/30/2011 at 7:54 pm #

    I recently helped a friend get a copy of his credit reports from all three companies via this site. It definitely helps make things more transparent after you view your own report(s). He found them very helpful. The process is very simple. Great article!

    • Paul 11/30/2011 at 10:44 pm #

      I make sure I check mine every year, it’s a good practice and it can help you to catch potential mistakes. Thanks for stopping by Mary!

  11. krantcents 11/30/2011 at 1:24 pm #

    Many businesses will pull a credit report on executives and people who handle money for example. This is generally done in the hiring process. It can be an annual policy depending on your job. Some companies use this information as a guide in the hiring process even if you do not handle money because it indicates how you handle responsibility.

  12. SB @ One Cent At A Time 11/30/2011 at 9:30 am #

    very useful piece of info Paul. I do check my report twice a year. Once through annual credit report and once through chase credit card service. Credit score is your credit worthiness we should be careful about it and monitor it constantly

    • Paul 11/30/2011 at 4:44 pm #

      Glad you found it useful SB! I check my credit report once per year but twice a year is even better! 🙂

  13. Aaron Hung 11/30/2011 at 8:08 am #

    Very informative info, that reminds me I have to check my report too. They don’t make you sign up or buy anything right?

  14. PKamp3 11/30/2011 at 7:49 am #

    Definitely dispute if you think you see an issue – the credit issuers are pretty good about cleaning up a credit report. Also, note the address linked – ‘annual’ (not free)… annualcreditreport.com

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