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This year, it's not just the kids who
are heading back to school-TrueCredit is giving you a session of Credit
Reporting 101. We tackled Credit Scoring 101 in July; now let's take on the
fundamentals of the credit reporting system. From the big three credit reporting
agencies to your rights under the Fair Credit Reporting Act, this course will
help you navigate the credit reporting maze.
The Credit Reporting Agencies
- TransUnion, Equifax and Experian (formerly TRW) are the three national credit
reporting agencies that keep records on consumers. The reporting agencies work
with lenders, creditors, insurers and employers to update and distribute your
information to the appropriate institutions. Here's an example of how the system
works:
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When you apply for a new credit card
the creditor requests a copy of your financial history from the reporting
agencies.
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The creditor uses your
credit reports and scores along with income and debt information to
determine what rates to offer.
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You start to use the new credit card
and the creditor reports your activities to the credit reporting agencies every
30 days.
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The credit reporting agencies update
your credit report as they receive new information from creditors or lenders.
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Your credit profile changes based on
your financial activity. The next time you apply for a credit card or loan, the
process repeats.
Your Credit Report - Your
credit report is divided into six main sections: consumer information (address,
birthday and employment), consumer statement, account histories, public records,
inquiries and creditor contacts. When you open a new account, miss a payment or
move, these sections are updated with new information. The old records will stay
on your credit report for about 7 years. Not all creditors report to all three
agencies and the agencies don't share their data so your reports from
TransUnion, Equifax and Experian could be substantially different from each
other. That's why it's important to check your
three credit reports every few months to ensure that the information is
accurate and up-to-date.
Correcting Inaccuracies -
Under the Fair Credit Reporting Act, consumers are protected from having
inaccurate information on their credit reports. If you find an inaccurate record
on your report, try contacting the creditor or lender associated with the mark
first. These companies can usually correct the mistake and send an update to the
credit reporting agencies. If you can't make progress this way, you can also
dispute the inaccuracy directly with the credit reporting agencies.
Working the System - Keeping
your credit reports healthy will improve your
credit scores and help get you the best rates on major purchases. We
recommend that you check your credit reports every 3-6 months in order to guard
against damaging inaccuracies and identity fraud. Routine check-ups along with
paying your bills on time, keeping your credit card balances below 35% of their
limits and correcting any negative inaccuracies will help you maintain a healthy
credit profile.
Get your credit report and score NOW!
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FREE Credit Report! Click here to get a copy of
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