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Credit Reporting Agencies

Find out how to obtain a free credit report from the major credit reporting agencies.

Credit reporting agencies gather an individual's payment history and make it available to businesses and individuals for a fee. [©Shutterstock, 2010]
©Shutterstock, 2010
Credit reporting agencies gather an individual's payment history and make it available to businesses and individuals for a fee.

Credit reporting agencies gather an individual's payment history for loans and credit cards and summarize the data on a credit report. Credit reporting agencies, sometimes called consumer reporting agencies or credit bureaus, charge a fee when a business accesses their information. Lenders use the information to assess whether a borrower is likely to pay bills on time. Insurance companies sometimes use credit reports to determine whether the insured is more likely to file a claim. Potential employers also may obtain an applicant's credit report as part of the hiring process, but only with written consent.

There are three major credit bureaus in the United States. There are also smaller bureaus and agencies that generally serve small, local markets. Consumers who use credit can avoid unpleasant surprises by finding out what's on their credit report prior to applying for a loan, credit card, insurance policy or even a job. They also can dispute inaccurate information on a credit report.

Obtaining a Free Credit Report

Equifax, Experian and Trans Union are the three main credit bureaus. Under the Fair Credit Reporting Act (FCRA), individuals can request a free copy of their credit report once a year from each of the three credit bureaus. Most people request a free copy of their credit report online at AnnualCreditReport.com. According to the Federal Deposit Insurance Corporation (FDIC), a free copy of a credit report is also obtainable over the phone by calling (877) 322-8228, or by mailing a completed form from the Web site. Online credit reports are available for immediate viewing, while phone and mail requests are sent to the consumer after approximately 15 days. Individuals should not contact the credit bureaus directly for the free report.

To obtain a free credit report online, individuals will need to prove their identity through a series of questions. Next, they select which of the three credit reports they would like to view online. Once this information is collected, the free credit report is available online for viewing. It lists all past and current credit-related activities. This includes all loans and credit cards, the balances on these accounts, payment history and other data. It also provides collection activity or bankruptcy information.

Disputing Information on a Credit Report

It is up to the consumer to spot errors on the credit report and notify the credit reporting agency or the creditor in order to have the mistake corrected. The credit reporting agency has 30 days to investigate the claim. Correcting errors on a credit report is the obligation of the credit reporting agency and the information provider under the Fair Credit Reporting Act.

Filing a complaint online is the fastest way to dispute items on a credit report, but it can also be done by phone or mail. The following credit bureau Web sites provide step-by-step instructions for disputing inaccurate or incomplete information on a credit report:

It is also possible to contact the creditor directly to inquire about an error on a credit report. The creditor must investigate the individual's claim and prove its accuracy. If an error is found, the information provider must report this to the credit reporting agency so the credit report can be updated.

Credit Rating

According to the Federal Trade Commission (FTC), creditors and insurance companies create statistical models to assign credit ratings to consumers. This is a numerical figure that represents the credit usage of an individual, including payment history, outstanding debt, when the accounts were opened and collection activity. A higher number indicates a better use of credit and a lower risk. Having a good credit rating makes an individual more likely to obtain the credit they want at better interest rates.

Under the Equal Credit Opportunity Act (ECOA), a creditor's scoring system cannot be based on race, gender, marital status or other factors that do not have a direct correlation to creditworthiness. As part of the FCRA, consumers have the right to obtain their credit score from national credit reporting agencies. These companies may charge a small fee for the credit rating information.

Impact of a Bad Credit Report

If consumers cannot prove their claim to inaccurate information or if the negative information is actually correct, it is likely to remain on the credit report for seven years. Bankruptcies and other serious infractions, such as tax liens, collection accounts and delinquent accounts may remain on the credit report for up to 10 years. Unpaid judgments filed against an individual may remain on a credit report for seven years, unless the statute of limitations is longer. Some negative information may remain on a credit report indefinitely. This includes any criminal convictions, life insurance applications and credit line applications over $150,000.

It is possible to improve a credit rating, but it takes time. To improve a credit rating, consumers should pay bills on time, pay down outstanding balances on credit cards and loans, and not apply for new credit.

Imposter Credit Reporting Web Sites

The FTC states that individuals should be aware of imposter Web sites offering free credit reports with the purchase of other products. Mistyping "AnnualCreditReport.com" may direct a consumer to such a site rather than the official site of the national credit reporting agencies.

The FTC also warns of e-mails from imposter companies. AnnualCreditReport.com will not ask for any personal information through e-mail. Any pop-up ads or spam that is received offering free credit reports should be reported via e-mail to the FTC at spam@uce.gov.

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