01. Self Help May Be Best
You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:
* "Credit problems? No problem!"
* "We can erase your bad credit - 100% guaranteed."
* "Create a new credit identity - legally."
* "We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!"
Do yourself a favor and save some money, too. Don't believe these statements. Only time, a conscious effort, and a personal debt repayment plan will improve your credit report.
02. The Credit Repair Scam
Every day, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is, they can't deliver. After you pay them hundreds or thousands of dollars in fees, these companies do nothing to improve your credit report; most simply vanish with your money.
03. The Credit Repair Warning Signs
If you decide to respond to a credit repair offer, look for these tell-tale signs of a scam:
* Companies that want you to pay for credit repair services before they provide any services.
* Companies that do not tell you your legal rights and what you can do for yourself for free.
* Companies that recommend that you not contact a credit reporting company directly.
* Companies that suggest that you try to invent a "new" credit identity – and then, a new credit report – by applying for an Employer Identification Number to use instead of your Social Security number.
* Companies that advise you to dispute all information in your credit report or take any action that seems illegal, like creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.
You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It's a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
04. The Truth About Credit Repair
No one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA):
* You're entitled to a free report if a company takes adverse action against you, like denying your application for credit, insurance, or employment, and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You're also entitled to one free report a year if you're unemployed and plan to look for a job within 60 days; if you're on welfare; or if your report is inaccurate because of fraud, including identity theft.
* Each of the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – is required to provide you with a free copy of your credit report, at your request, once every 12 months. The companies are rolling this out across the country during a nine-month period. By September 2005, consumers from coast to coast will have access to a free annual credit report if they ask for it. Otherwise, a consumer reporting company may charge you up to $9.50 for another copy of your report within a 12-month period.
* You can dispute mistakes or outdated items for free. Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the consumer reporting company and the information provider.
Step 1
Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Your letter may look something like the one on page 6. Send your letter by certified mail, "return receipt requested," so you can document what the consumer reporting company received. Keep copies of your dispute letter and enclosures.
Consumer reporting companies must investigate the items in question – usually within 30 days – unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.
When the investigation is complete, the consumer reporting company must give you the results in writing and a free copy of your report if the dispute results in a change. If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider.
If you request, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.
If an investigation doesn't resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.
Step 2
Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct – that is, if the information is found to be inaccurate – the information provider may not report it again.
05. Reporting Accurate Negative Information
When negative information in your report is accurate, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. There is no time limit on reporting: information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you've applied for more than $150,000 worth of credit or life insurance. There is a standard method for calculating the seven-year reporting period. Generally, the period runs from the date that the event took place.
06. The Credit Repair Organizations Act
By law, credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign anything. The law contains specific protections for you. For example, a credit repair company cannot:
* Make false claims about their services.
* Charge you until they have completed the promised services.
* Perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.
Your contract must specify:
* The payment terms for services, including their total cost.
* A detailed description of the services to be performed.
* How long it will take to achieve the results.
* Any guarantees they offer.
* The company's name and business address.
07. Have You Been Victimized?
Many states have laws regulating credit repair companies. State law enforcement officials may be helpful if you've lost money to credit repair scams.
If you've had a problem with a credit repair company, don't be embarrassed to report it. While you may fear that contacting the government will only make your problems worse, remember that laws are in place to protect you. Contact your local consumer affairs office or your state Attorney General (AGs). Many AGs have toll-free consumer hotlines. Check the Blue Pages of your telephone directory for the phone number or check www.naag.org for a list of state Attorneys General.
08. Need Help? Don't Despair.
Just because you have a poor credit report doesn't mean you won't be able to get credit. Creditors set their own credit-granting standards and not all of them look at your credit history the same way. Some may look only at more recent years to evaluate you for credit, and they may grant credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.
If you're not disciplined enough to create a workable budget and stick to it, work out a repayment plan with your creditors, or keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But not all are reputable. For example, just because an organization says it's "nonprofit," there's no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, or hide their fees by pressuring consumers to make "voluntary" contributions that only cause more debt.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
09. Do-It-Yourself Check-Up
Even if you don't have a poor credit history, some financial advisors and consumer advocates suggest you review your credit report periodically:
* Because the information it contains affects whether you can get a loan or insurance – and how much you will have to pay for it.
* To make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
* To help guard against identity theft. That's when someone uses your personal information – like your name, your Social Security number, or your credit card number – to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don't pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.
10. Sample Dispute Letter
Date
Your Name
Your Address
Your City, State, Zip Code
Complaint Department
Name of Company
Address
City, State, Zip Code
Dear Sir or Madam:
I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.
This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.
Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.
Sincerely,
Your name
Enclosures: (List what you are enclosing)
The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Source
Showing posts with label Credit Report. Show all posts
Showing posts with label Credit Report. Show all posts
Wednesday, October 24, 2007
Learn more about Your Credit Score
Frequently Asked Questions
01. What is credit scoring?
Credit scoring is the quickest, most accurate and consistent way of determining the likelihood that credit users will pay their bills. Credit scoring began in the late 1950s, and since then, it has become widely accepted by lenders as a reliable means of credit evaluation. Consumers have benefited from scoring's speed and accuracy, which have helped them gain access to a wide variety of credit products.
02. Why should you care?
Increasingly, lenders are trying to fund loans with prices (rates, fees and terms) that more precisely match your risk. In theory, someone with a 900 credit score should get much better rates than someone with a 650 score.
So far, though, it hasn't exactly worked that way, at least not that precisely. There are several grades of credit which have arisen, most notably below the 620 line (A-, B, C, D). But above the 620 line, everyone pretty much pays the same. Lenders can penalize you for poorly managing credit, but don't much reward you for effectively and wisely managing your debt, at least so far.
03. Why credit score at all?
It's not as though consumers have been clamoring for some sort of number, so why are we even bothering to go though this process for each loan? In the past, mortgages have been pooled together for sale, with these pools containing a range of credit risks -- all pretty good, but some better than others, and some worse than others.
Some borrowers would be more likely to pay off their loans early, and others might fail to make timely payments at all. The securities derived from these pools each carried a vaguely known level of risk to the investor, which made holding and hedging these as a part of an investment portfolio a bit of a tricky business.
It's long been the desire of investors to be able to slice and dice portfolios of mortgage loans to add or remove risk (and rewards) to a larger investment portfolio. With known risk, a greater level of performance could be assured. Investors are willing to pay more for a greater level of precision, and began pressing the industry to adopt a means to achieve it. Hence, credit scores; now, a seller can put together a package of loans for sale that aren't from a wide muddy pool of credit risks, but rather from a very specific kind or kinds of borrowers, all with scores which are close together.
04. Who really benefits from credit scores?
Credit scoring is actually a good idea, at least on paper, and some ways in practice, too. The sub-prime lending industry (for borrowers with not-so-good credit) could not have been developed without it. Certain borrowers have seen an explosion in the credit available to them, with more competitors vying for their business, lower rates and more choices in product.
It's safe to say that thousands of homeowners have their credit score to thank for their chance to get a mortgage. The credit score is helping to make loan approvals faster, simpler and more convenient for all kinds of loans. At least so far, however, only folks at the bottom of the scale have seen significant "rewards" for the adoption of credit scoring on a wide basis in mortgage lending.
05. What are credit bureau scores?
Credit bureau scores are just one type of credit score. It is computed and calculated from the information on your credit bureau file at the time it was requested. A credit score is like a snapshot: It sums up, at any given point in time, what your credit history and current usage predicts about your future credit performance.
06. Where do credit scores come from?
Statistical scoring models calculate credit scores. Mathematical tables assign points for different pieces of information that best predict future credit performance. Developing these models involves studying how millions of people have used credit. Score model developers find predictive factors in the data that have proven to indicate future credit performance.
Credit score models can be developed from different sources of data. A custom model can developed from a business's own data on its customers. Information is taken from credit application forms and credit bureau reports. Credit bureau models are developed from information in consumer credit bureau reports.
07. How are credit scoring models used?
Credit scores give lenders a fast, consistent and reliable indication of how likely you'll be to repay a loan according to the terms of your agreement. Scores are usually just one of many factors a lender considers in making a decision. This is particularly true in industries like mortgage lending where appraisals and other information play an important part.
08. Who calculates credit bureau scores?
Credit bureau scores are calculated by the credit bureaus and are based solely on the data in their credit reports at the time a lender requests the score. Lenders usually calculate application scores directly. Custom credit scores can be calculated by lenders or by the credit bureaus with whom they work.
09. What is considered a good credit score?
This is a difficult question to answer. With most scoring models, the higher the score the better. Higher credit scores mean lower risk. For other scoring models it's the other way around. More importantly, every company using scoring decides for itself which scores are "good" and which are "not so good," based on its goals and estimates for certain types of loans.
The credit score is only a tool, not a recommendation; the lender always makes the final determination. That decision may be to offer people with lower credit scores a different product, rather than turning them down.
10. What's bad about credit scoring?
In a word, secrecy. In the bad old days of mortgage lending, you may have been judged by a person or committee who used some subjective process to evaluate you, a process which may have been arbitrary. You didn't know what they wanted to see in a borrower, so you applied and hoped.
Especially in the last 20 years, more and more light has been let into the underwriting process, and that knowledge turned into power for the consumer. Knowing where they stood in a lender's eyes, potential borrowers went from place to place in search of a better deal.
Credit scoring is a high-tech way to draw a big, black curtain between borrower and underwriter. Since the credit score data could not be released to consumer, by both choice and contract, the power in pricing returned to the lender. Armed with a score, the lender knows precisely who you are; but you no longer have any idea exactly how good or bad you appear.
For some loans, lenders have stopped even providing rate quotes when you call. They want you to fill out an application first, so they can extract a credit score for you, knowing full well that once you've applied (and perhaps paid a fee) you're less likely to go elsewhere.
11. Why all the secrecy?
It's been a competitive stance by FICO not to release credit scores. It's simple enough to understand that once that FICO proved that scoring works, that other competing models would be developed. They are, including entries from the credit bureaus, Fannie Mae and Freddie Mac, and others.
But there's a good reason why they have resisted telling consumers about their credit scores and what goes into them. The scoring model depends upon consumers going about their business as usual, paying or not paying bills on time, opening lines of credit and getting credit cards as they normally would.
If you knew that closing out a Visa account you barely use might raise your score by some amount, you would close it. That change in behavior, repeated millions of times (and across the various kinds of credit weighting) would distort or destroy the model, rendering the credit score and scoring process worthless.
FICO has claimed that revealing the score to a consumer would merely confuse the borrower even further, and that the credit score by itself isn't useful without proper understanding of the process.
12. Do credit scores cause overcharging?
Because you can't know how you appear, you might be charged far in excess of what you might pay. Credit scoring may have helped foster "predatory lending", a situation where a borrower, especially less sophisticated borrowers, may fall victim to an unscrupulous lender or broker. This can occur especially in cases where a borrower fails to shop far and wide for a loan, and happens largely in lesser-educated areas, and among the poor and elderly.
While the borrower might have pretty good credit, the salesperson might only offer them loans with high rates, fees, or both; not knowing that they might do far better elsewhere, and lacking both the credit score information and understanding of the process, the borrower signs on for the loan. If the borrower had access to his/her score and a little knowledge of the lending process, they could search more aggressively.
13. What's in the future?
Enough pressure has been building around this issue that regulators and even legislators are getting into the act. Recent, Congress has been considering the Fair Credit Full Disclosure Act (H.R. 2856), sponsored by Rep. Chris Cannon (R-Utah), but no action has yet been take to advance the bill along. The California legislature is also considering a law to force release of credit scores. Soon, FICO and the credit reporting agencies TransUnion, Equifax and Experian are planning to provide evaluations of your credit profile to you, for a fee.
In the meantime, if you are applying for a mortgage, you can certainly ask what your credit score is. FICO has stated that it has no specific objection to providing you with the number as part of a financial transaction.
Source
01. What is credit scoring?
Credit scoring is the quickest, most accurate and consistent way of determining the likelihood that credit users will pay their bills. Credit scoring began in the late 1950s, and since then, it has become widely accepted by lenders as a reliable means of credit evaluation. Consumers have benefited from scoring's speed and accuracy, which have helped them gain access to a wide variety of credit products.
02. Why should you care?
Increasingly, lenders are trying to fund loans with prices (rates, fees and terms) that more precisely match your risk. In theory, someone with a 900 credit score should get much better rates than someone with a 650 score.
So far, though, it hasn't exactly worked that way, at least not that precisely. There are several grades of credit which have arisen, most notably below the 620 line (A-, B, C, D). But above the 620 line, everyone pretty much pays the same. Lenders can penalize you for poorly managing credit, but don't much reward you for effectively and wisely managing your debt, at least so far.
03. Why credit score at all?
It's not as though consumers have been clamoring for some sort of number, so why are we even bothering to go though this process for each loan? In the past, mortgages have been pooled together for sale, with these pools containing a range of credit risks -- all pretty good, but some better than others, and some worse than others.
Some borrowers would be more likely to pay off their loans early, and others might fail to make timely payments at all. The securities derived from these pools each carried a vaguely known level of risk to the investor, which made holding and hedging these as a part of an investment portfolio a bit of a tricky business.
It's long been the desire of investors to be able to slice and dice portfolios of mortgage loans to add or remove risk (and rewards) to a larger investment portfolio. With known risk, a greater level of performance could be assured. Investors are willing to pay more for a greater level of precision, and began pressing the industry to adopt a means to achieve it. Hence, credit scores; now, a seller can put together a package of loans for sale that aren't from a wide muddy pool of credit risks, but rather from a very specific kind or kinds of borrowers, all with scores which are close together.
04. Who really benefits from credit scores?
Credit scoring is actually a good idea, at least on paper, and some ways in practice, too. The sub-prime lending industry (for borrowers with not-so-good credit) could not have been developed without it. Certain borrowers have seen an explosion in the credit available to them, with more competitors vying for their business, lower rates and more choices in product.
It's safe to say that thousands of homeowners have their credit score to thank for their chance to get a mortgage. The credit score is helping to make loan approvals faster, simpler and more convenient for all kinds of loans. At least so far, however, only folks at the bottom of the scale have seen significant "rewards" for the adoption of credit scoring on a wide basis in mortgage lending.
05. What are credit bureau scores?
Credit bureau scores are just one type of credit score. It is computed and calculated from the information on your credit bureau file at the time it was requested. A credit score is like a snapshot: It sums up, at any given point in time, what your credit history and current usage predicts about your future credit performance.
06. Where do credit scores come from?
Statistical scoring models calculate credit scores. Mathematical tables assign points for different pieces of information that best predict future credit performance. Developing these models involves studying how millions of people have used credit. Score model developers find predictive factors in the data that have proven to indicate future credit performance.
Credit score models can be developed from different sources of data. A custom model can developed from a business's own data on its customers. Information is taken from credit application forms and credit bureau reports. Credit bureau models are developed from information in consumer credit bureau reports.
07. How are credit scoring models used?
Credit scores give lenders a fast, consistent and reliable indication of how likely you'll be to repay a loan according to the terms of your agreement. Scores are usually just one of many factors a lender considers in making a decision. This is particularly true in industries like mortgage lending where appraisals and other information play an important part.
08. Who calculates credit bureau scores?
Credit bureau scores are calculated by the credit bureaus and are based solely on the data in their credit reports at the time a lender requests the score. Lenders usually calculate application scores directly. Custom credit scores can be calculated by lenders or by the credit bureaus with whom they work.
09. What is considered a good credit score?
This is a difficult question to answer. With most scoring models, the higher the score the better. Higher credit scores mean lower risk. For other scoring models it's the other way around. More importantly, every company using scoring decides for itself which scores are "good" and which are "not so good," based on its goals and estimates for certain types of loans.
The credit score is only a tool, not a recommendation; the lender always makes the final determination. That decision may be to offer people with lower credit scores a different product, rather than turning them down.
10. What's bad about credit scoring?
In a word, secrecy. In the bad old days of mortgage lending, you may have been judged by a person or committee who used some subjective process to evaluate you, a process which may have been arbitrary. You didn't know what they wanted to see in a borrower, so you applied and hoped.
Especially in the last 20 years, more and more light has been let into the underwriting process, and that knowledge turned into power for the consumer. Knowing where they stood in a lender's eyes, potential borrowers went from place to place in search of a better deal.
Credit scoring is a high-tech way to draw a big, black curtain between borrower and underwriter. Since the credit score data could not be released to consumer, by both choice and contract, the power in pricing returned to the lender. Armed with a score, the lender knows precisely who you are; but you no longer have any idea exactly how good or bad you appear.
For some loans, lenders have stopped even providing rate quotes when you call. They want you to fill out an application first, so they can extract a credit score for you, knowing full well that once you've applied (and perhaps paid a fee) you're less likely to go elsewhere.
11. Why all the secrecy?
It's been a competitive stance by FICO not to release credit scores. It's simple enough to understand that once that FICO proved that scoring works, that other competing models would be developed. They are, including entries from the credit bureaus, Fannie Mae and Freddie Mac, and others.
But there's a good reason why they have resisted telling consumers about their credit scores and what goes into them. The scoring model depends upon consumers going about their business as usual, paying or not paying bills on time, opening lines of credit and getting credit cards as they normally would.
If you knew that closing out a Visa account you barely use might raise your score by some amount, you would close it. That change in behavior, repeated millions of times (and across the various kinds of credit weighting) would distort or destroy the model, rendering the credit score and scoring process worthless.
FICO has claimed that revealing the score to a consumer would merely confuse the borrower even further, and that the credit score by itself isn't useful without proper understanding of the process.
12. Do credit scores cause overcharging?
Because you can't know how you appear, you might be charged far in excess of what you might pay. Credit scoring may have helped foster "predatory lending", a situation where a borrower, especially less sophisticated borrowers, may fall victim to an unscrupulous lender or broker. This can occur especially in cases where a borrower fails to shop far and wide for a loan, and happens largely in lesser-educated areas, and among the poor and elderly.
While the borrower might have pretty good credit, the salesperson might only offer them loans with high rates, fees, or both; not knowing that they might do far better elsewhere, and lacking both the credit score information and understanding of the process, the borrower signs on for the loan. If the borrower had access to his/her score and a little knowledge of the lending process, they could search more aggressively.
13. What's in the future?
Enough pressure has been building around this issue that regulators and even legislators are getting into the act. Recent, Congress has been considering the Fair Credit Full Disclosure Act (H.R. 2856), sponsored by Rep. Chris Cannon (R-Utah), but no action has yet been take to advance the bill along. The California legislature is also considering a law to force release of credit scores. Soon, FICO and the credit reporting agencies TransUnion, Equifax and Experian are planning to provide evaluations of your credit profile to you, for a fee.
In the meantime, if you are applying for a mortgage, you can certainly ask what your credit score is. FICO has stated that it has no specific objection to providing you with the number as part of a financial transaction.
Source
Your Credit Score
01. Overview
Credit scoring is a statistical method of assessing the credit risk of a loan applicant. It uses mathematical models to evaluate a person's credit worthiness based on their credit history and current credit accounts. The credit score was first invented and developed in the 1950s, but has come into widespread use in just the last two decades.
In the mid 1980s the three major credit bureaus, Equifax, TransUnion and Experian (formerly TRW) all worked with Fair, Isaac and Company (FICO) to develop credit scoring models. These models allow each bureau to offer a score based solely on the contents of the credit bureau's data about a person.
The actual numerical credit score is a number that indicates the likelihood that an individual will pay back a loan. It is typically calculated by reviewing the following parameters:
1. Past payment delinquencies
2. Current level of indebtedness
3. Types of credit accounts currently open
4. Length of credit history
5. Number of credit inquiries
6. How often credit is applied for
7. Other derogatory credit behaviors
Each major credit bureau has its own unique method for calculating credit scores. However, the scoring models have been somewhat normalized so that a numerical score at one bureau is roughly the equivalent of the same credit score at another. Therefore, a score of 600 from Equifax indicates the same creditworthiness as a credit score of 600 from Trans Union or Experian, even though the calculations used to determine those scores may be different at each bureau.
Mortgage brokers and lenders frequently use these scores (commonly known as FICO scores) as an important factor in the decision whether or not to offer credit. The higher your credit score the better credit risk you are. Depending on the credit bureau, credit scores range from 375 to 900 points, but those numbers mean little on their own. They only become meaningful within the context of a particular lender's underwriting guidelines.
Nevertheless, because major institutions in the mortgage industry such as the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC) have enforced guidelines for lenders based on credit scoring, certain general rules are accepted. So, in general, credit scoring will place a loan applicant in of the following three categories.
02. Credit Score Guidelines
Scoring models like the one developed by FICO have always been shrouded in mystery, especially when it comes to specifics. Generally speaking, though, they utilize your credit history, income, outstanding debt and debt utilization over the years, access to credit, and other indicators of your financial behavior to determine how likely you are to pay your bills on time, or if at all.
A numerical score is then developed, typically ranging from 300 to 900, with the low end of the scale indicating a poor credit risk. This can tell a lender whether or not he'll lend to you. For example, a credit score of 620 is frequently cited as a "cutoff point" for loans which can be funded by Fannie Mae or Freddie Mac. Below that, and you're usually off into the private "sub-prime" market, where rates are higher.
650 and Above
In general, a score of 650 or above indicates a very good credit history. People with these credit scores will usually find the loan process quick and easy, and will have a good chance to obtain a loan at a relatively low rate of interest.
620 to 650
Credit scores between 620 and 650 indicate basically good credit, but also suggest to lenders that they should look at the potential borrower to asses any particular credit risks. (Average FICO scores fall into this range.) People with scores in this range have a good chance at a loan at a good rate, but may have to provide additional documentation and explanations to the lender before the loan is approved. This means that their loan closing may take longer, making their experience more like that of borrowers in the days before credit scoring, when every individual was researched.
Below 620
A credit score below 620 may prevent a borrower from getting the best interest rates, as they may be considered a greater credit risk-but it does not mean that mortgage funding can't be found. The process will probably be lengthier and, as noted, the terms of loan less appealing, but often a loan can still be obtained.
03. Credit Scoring Models
A typical credit scoring model contains a list of questions and answers. A specific number of points are assigned to each answer. Only information proven to be predictive of future credit performance is used in a model. Below are some examples of what a typical model will (and will not) consider.
Information from your credit application:
* How long you've lived at your current address
* Your current occupation
* Your financial obligations
Information from your credit bureau report:
* Amount of outstanding credit balances
* Amount of credit you are currently using
* Length of time with established credit
* Any late payments made
These items are definitely not considered:
* Your race
* Your gender
* Your religion
* Marital status
* Place of birth
* Neighborhood you live in
According to FICO, the breakdown of your credit score is as follows:
* 35% of the credit score is determined by payment histories on your credit accounts, with recent history weighted a bit more heavily than the distant past.
* 30% is based upon the amount of debt you have outstanding with all creditors.
* 15% is produced on the basis of how long you've been a credit user (a longer history is better if you've always made timely payments).
* 10% is comprised of very recent history, and whether or not you've been actively seeking (and getting) loans or credit lines in the past few months.
* 10% is calculated from the mix of credit you hold, including installment loans (like car loans), leases, mortgages, credit cards, etc.
Other models being employed are sure to utilize these in various weightings, plus other data that may be fed in to the model. These might include your address or zip code, how often you've moved and other public and private information about you.
04. Credit Report Errors
You should correct any errors on your credit report. It's a good idea to review your credit report from each bureau regularly. If you see an inaccuracy, report it to the credit bureau. The three major credit bureaus in the United States are Equifax, Trans Union and Experian. All of these companies have procedures for correcting information promptly. For more information click here.
If you discover incorrect information when applying for a loan, be sure to tell your broker or lender. They should be aware of the fact that erroneous data may lead to an unusable score, and consider that fact when making their decision.
05. Raising Your Credit Score
You can improve your future score, but it is unlikely that any single action you will take will have a large impact on your score immediately. This is because your score reflects your credit patterns over time.
Some things you can do that will improve your credit score in the future:
* Pay your bills on time. Delinquent payments and collections can have a major negative impact on your score. As they get older and you pay all other obligations on time, the delinquent information will have less impact.
* High outstanding debt can affect your score, so pay down any loan balances.
* Apply for new credit sparingly. Shopping for credit can have an adverse affect on your score.
It is important to realize that there is no single action that will immediately raise your credit score. Each time a credit score is calculated, specific reasons (score factors) are delivered to the lender along with the score. If you've been given your score, you can ask your lender for these reasons.
These factors represent the three major reasons why your credit score was not higher. Anything that you can do to address these factors will most likely improve your score.
06. Finding Out Your Credit Score
Many lenders may tell you your credit score, though others may not. One reason is that many different types of scores are in use, therefore the number by itself might not hold much meaning to you. Another is that the credit scores can change on a daily basis as new information is added to your credit file.
A credit bureau score is just a tool that lenders use. By itself it does not tell you if your application for credit will be approved or not. If you find out your score is 610, for example, you also need to know your lender's policy for those borrowers with scores in that range.
Lenders are not required to disclose your credit score, but if you have been turned down for a loan in whole or part because your score was too low, they are required to give you the reasons for the score that you received. These reasons give you valuable information you can use to improve your score.
Source
Credit scoring is a statistical method of assessing the credit risk of a loan applicant. It uses mathematical models to evaluate a person's credit worthiness based on their credit history and current credit accounts. The credit score was first invented and developed in the 1950s, but has come into widespread use in just the last two decades.
In the mid 1980s the three major credit bureaus, Equifax, TransUnion and Experian (formerly TRW) all worked with Fair, Isaac and Company (FICO) to develop credit scoring models. These models allow each bureau to offer a score based solely on the contents of the credit bureau's data about a person.
The actual numerical credit score is a number that indicates the likelihood that an individual will pay back a loan. It is typically calculated by reviewing the following parameters:
1. Past payment delinquencies
2. Current level of indebtedness
3. Types of credit accounts currently open
4. Length of credit history
5. Number of credit inquiries
6. How often credit is applied for
7. Other derogatory credit behaviors
Each major credit bureau has its own unique method for calculating credit scores. However, the scoring models have been somewhat normalized so that a numerical score at one bureau is roughly the equivalent of the same credit score at another. Therefore, a score of 600 from Equifax indicates the same creditworthiness as a credit score of 600 from Trans Union or Experian, even though the calculations used to determine those scores may be different at each bureau.
Mortgage brokers and lenders frequently use these scores (commonly known as FICO scores) as an important factor in the decision whether or not to offer credit. The higher your credit score the better credit risk you are. Depending on the credit bureau, credit scores range from 375 to 900 points, but those numbers mean little on their own. They only become meaningful within the context of a particular lender's underwriting guidelines.
Nevertheless, because major institutions in the mortgage industry such as the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC) have enforced guidelines for lenders based on credit scoring, certain general rules are accepted. So, in general, credit scoring will place a loan applicant in of the following three categories.
02. Credit Score Guidelines
Scoring models like the one developed by FICO have always been shrouded in mystery, especially when it comes to specifics. Generally speaking, though, they utilize your credit history, income, outstanding debt and debt utilization over the years, access to credit, and other indicators of your financial behavior to determine how likely you are to pay your bills on time, or if at all.
A numerical score is then developed, typically ranging from 300 to 900, with the low end of the scale indicating a poor credit risk. This can tell a lender whether or not he'll lend to you. For example, a credit score of 620 is frequently cited as a "cutoff point" for loans which can be funded by Fannie Mae or Freddie Mac. Below that, and you're usually off into the private "sub-prime" market, where rates are higher.
650 and Above
In general, a score of 650 or above indicates a very good credit history. People with these credit scores will usually find the loan process quick and easy, and will have a good chance to obtain a loan at a relatively low rate of interest.
620 to 650
Credit scores between 620 and 650 indicate basically good credit, but also suggest to lenders that they should look at the potential borrower to asses any particular credit risks. (Average FICO scores fall into this range.) People with scores in this range have a good chance at a loan at a good rate, but may have to provide additional documentation and explanations to the lender before the loan is approved. This means that their loan closing may take longer, making their experience more like that of borrowers in the days before credit scoring, when every individual was researched.
Below 620
A credit score below 620 may prevent a borrower from getting the best interest rates, as they may be considered a greater credit risk-but it does not mean that mortgage funding can't be found. The process will probably be lengthier and, as noted, the terms of loan less appealing, but often a loan can still be obtained.
03. Credit Scoring Models
A typical credit scoring model contains a list of questions and answers. A specific number of points are assigned to each answer. Only information proven to be predictive of future credit performance is used in a model. Below are some examples of what a typical model will (and will not) consider.
Information from your credit application:
* How long you've lived at your current address
* Your current occupation
* Your financial obligations
Information from your credit bureau report:
* Amount of outstanding credit balances
* Amount of credit you are currently using
* Length of time with established credit
* Any late payments made
These items are definitely not considered:
* Your race
* Your gender
* Your religion
* Marital status
* Place of birth
* Neighborhood you live in
According to FICO, the breakdown of your credit score is as follows:
* 35% of the credit score is determined by payment histories on your credit accounts, with recent history weighted a bit more heavily than the distant past.
* 30% is based upon the amount of debt you have outstanding with all creditors.
* 15% is produced on the basis of how long you've been a credit user (a longer history is better if you've always made timely payments).
* 10% is comprised of very recent history, and whether or not you've been actively seeking (and getting) loans or credit lines in the past few months.
* 10% is calculated from the mix of credit you hold, including installment loans (like car loans), leases, mortgages, credit cards, etc.
Other models being employed are sure to utilize these in various weightings, plus other data that may be fed in to the model. These might include your address or zip code, how often you've moved and other public and private information about you.
04. Credit Report Errors
You should correct any errors on your credit report. It's a good idea to review your credit report from each bureau regularly. If you see an inaccuracy, report it to the credit bureau. The three major credit bureaus in the United States are Equifax, Trans Union and Experian. All of these companies have procedures for correcting information promptly. For more information click here.
If you discover incorrect information when applying for a loan, be sure to tell your broker or lender. They should be aware of the fact that erroneous data may lead to an unusable score, and consider that fact when making their decision.
05. Raising Your Credit Score
You can improve your future score, but it is unlikely that any single action you will take will have a large impact on your score immediately. This is because your score reflects your credit patterns over time.
Some things you can do that will improve your credit score in the future:
* Pay your bills on time. Delinquent payments and collections can have a major negative impact on your score. As they get older and you pay all other obligations on time, the delinquent information will have less impact.
* High outstanding debt can affect your score, so pay down any loan balances.
* Apply for new credit sparingly. Shopping for credit can have an adverse affect on your score.
It is important to realize that there is no single action that will immediately raise your credit score. Each time a credit score is calculated, specific reasons (score factors) are delivered to the lender along with the score. If you've been given your score, you can ask your lender for these reasons.
These factors represent the three major reasons why your credit score was not higher. Anything that you can do to address these factors will most likely improve your score.
06. Finding Out Your Credit Score
Many lenders may tell you your credit score, though others may not. One reason is that many different types of scores are in use, therefore the number by itself might not hold much meaning to you. Another is that the credit scores can change on a daily basis as new information is added to your credit file.
A credit bureau score is just a tool that lenders use. By itself it does not tell you if your application for credit will be approved or not. If you find out your score is 610, for example, you also need to know your lender's policy for those borrowers with scores in that range.
Lenders are not required to disclose your credit score, but if you have been turned down for a loan in whole or part because your score was too low, they are required to give you the reasons for the score that you received. These reasons give you valuable information you can use to improve your score.
Source
Your Free Credit Report
01. Access to a Free Credit Report
A recent amendment to the federal Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies to provide you with a free credit report, at your request, once every 12 months. The FCRA promotes the accuracy and privacy of information in the files of the nation's consumer reporting companies. The Federal Trade Commission (FTC), the nation's consumer protection agency, enforces the FCRA with respect to consumer reporting companies.
A credit report contains information on where you live, how you pay your bills, and whether you've been sued, arrested, or filed for bankruptcy. Nationwide consumer reporting companies sell the information in your credit report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home. There are three nationwide consumer reporting companies:
1. Equifax
2. Experian
3. Trans Union
02. How to Get Your Free Credit Report
Consumers in Western states will first be able to order their free credit reports under the federal law beginning December 1, 2004. Consumers in other states will be able to order their copies according to a regional roll-out.
The three nationwide consumer reporting companies have set up one central website and a toll-free telephone number where you can order your free credit report:
* Visit: AnnualCreditReport.com
* Call: 1-877-322-8228
Or, you can complete the Annual Credit Report Request Form available at the website above and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
You may order your free credit reports from each of the three nationwide consumer reporting companies at the same time, or you can order from only one or two. The law allows you to order one free credit report from each of the nationwide consumer reporting companies every 12 months.
Source
A recent amendment to the federal Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies to provide you with a free credit report, at your request, once every 12 months. The FCRA promotes the accuracy and privacy of information in the files of the nation's consumer reporting companies. The Federal Trade Commission (FTC), the nation's consumer protection agency, enforces the FCRA with respect to consumer reporting companies.
A credit report contains information on where you live, how you pay your bills, and whether you've been sued, arrested, or filed for bankruptcy. Nationwide consumer reporting companies sell the information in your credit report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home. There are three nationwide consumer reporting companies:
1. Equifax
2. Experian
3. Trans Union
02. How to Get Your Free Credit Report
Consumers in Western states will first be able to order their free credit reports under the federal law beginning December 1, 2004. Consumers in other states will be able to order their copies according to a regional roll-out.
The three nationwide consumer reporting companies have set up one central website and a toll-free telephone number where you can order your free credit report:
* Visit: AnnualCreditReport.com
* Call: 1-877-322-8228
Or, you can complete the Annual Credit Report Request Form available at the website above and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
You may order your free credit reports from each of the three nationwide consumer reporting companies at the same time, or you can order from only one or two. The law allows you to order one free credit report from each of the nationwide consumer reporting companies every 12 months.
Source
Your Credit Report
If you've ever applied for a charge account, a personal loan, insurance, or a job, there's a file about you. This file contains information on where you work and live, how you pay your bills, and whether you've been sued, arrested, or filed for bankruptcy.
Companies that gather and sell this information are called Consumer Reporting Agencies (CRAs). The most common type of CRA is the credit bureau. The information CRAs sell about you to creditors, employers, insurers and other businesses is called a credit report or consumer report.
The Fair Credit Reporting Act (FCRA), enforced by the Federal Trade Commission, is designed to promote accuracy and ensure the privacy of the information used in credit reports. Recent amendments to the Act expand your rights and place additional requirements on CRAs. Businesses that supply information about you to CRAs and those that use credit reports also have new responsibilities under the law.
Here are some frequently asked questions consumers have about credit reports and Consumer Reporting Agencies. Note that you may have additional rights under state laws.
Frequently Asked Questions
01. How do I find the CRA that has my credit report?
Contact the CRAs listed in the Yellow Pages under "credit" or "credit rating and reporting." Because more than one CRA may have a file on you, call each until you locate all the agencies maintaining your file. The three major national credit bureaus are Equifax, Experian (formerly TRW) and Trans Union.
In addition, anyone who takes action against you in response to a report supplied by a CRA, must give you the name, address, and telephone number of the CRA that provided the report.
02. Do I have a right to know what's in my credit report?
Only if you ask for it. The CRA must tell you everything in your report, including medical information, and in most cases, the sources of the information. The CRA also must give you a list of everyone who has requested your report within the past year. Two years for employment related requests.
03. Is there a charge for my credit report?
Sometimes. There's no charge if a company takes adverse action against you, such as denying your application for credit, insurance or employment, and you request your report within 60 days of receiving the notice of the action. The notice will give you the name, address, and phone number of the CRA. In addition, you're entitled to one free report a year if you can prove that:
* You're unemployed and plan to look for a job within 60 days.
* You're on welfare.
* Your report is inaccurate because of fraud.
* Otherwise, a CRA may charge you up to $8.50 for a copy of your report.
04. What can I do about inaccurate or incomplete information?
Under the new law, both the CRA and the information provider have responsibilities for correcting inaccurate or incomplete information in your report. To protect all your rights under this law, contact both the CRA and the information provider.
First, tell the CRA in writing what information you believe is inaccurate. CRAs must reinvestigate the items in question (usually within 30 days) unless they consider your dispute frivolous. They also must forward all relevant data you provide about the dispute to the information provider. After the information provider receives notice of a dispute from the CRA, it must investigate, review all relevant information provided by the CRA, and report the results to the CRA. If the information provider finds the disputed information to be inaccurate, it must notify all nationwide CRAs so that they can correct this information in your file.
When the reinvestigation is complete, the CRA must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the CRA cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the CRA gives you a written notice that includes the name, address, and phone number of the provider.
Second, tell the creditor or other information provider in writing that you dispute an item. Many providers specify an address for disputes. If the provider then reports the item to any CRA, it must include a notice of your dispute. In addition, if you are correct (that is, if the information is inaccurate), the information provider may not use it again.
05. What can I do if the credit provider won't correct the information I dispute?
A reinvestigation may not resolve your dispute with the CRA. If that's the case, ask the CRA to include your statement of the dispute in your file and in future reports. If you request, the CRA also will provide your statement to anyone who received a copy of the old report in the recent past. There usually is a fee for this service.
If you tell the information provider that you dispute an item, a notice of your dispute must be included anytime the information provider reports the item to a CRA.
06. Can my employer get my credit report?
Only if you give approval. A CRA may not supply information about you to your employer, or to a prospective employer, without your written consent.
07. Can others get a credit report that contains medical information about me?
Not without your approval.
08. What should I know about "investigative consumer reports"?
"Investigative consumer reports" are detailed reports that involve interviews with your neighbors or acquaintances about your lifestyle, character, and reputation. They may be used in connection with insurance and employment applications. You'll be notified in writing when a company orders such a report. The notice will explain your right to request certain information about the report from the company you applied to. If your application is rejected, you may get additional information from the CRA. However, the CRA does not have to reveal the sources of the information.
09. How long can a CRA report negative information?
Seven years. With the following exceptions:
* Bankruptcy information may be reported for 10 years.
* Information reported in response to an application for a job with a salary of more than $75,000 has no time limit.
* Information reported because of an application for more than $150,000 worth of credit or life insurance has no time limit.
* Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer.
10. Can anyone get a copy of my credit report?
No. Only people with a legitimate business need, as recognized by the FCRA. For example, a company is allowed to get your report if you apply for credit, insurance, employment, or to rent an apartment.
11. How can I stop a CRA from including me on lists for unsolicited offers?
Creditors and insurers may use CRA file information as a basis for sending you unsolicited offers. These offers must include a toll-free number for you to call if you want to remove your name and address from lists for two years; completing a form that the CRA provides for this purpose will keep your name off the lists permanently.
12.Do I have the right to sue for damages?
You may sue a CRA, a user or, in some cases, a provider of CRA data, in state or federal court for most violations of the FCRA. If you win, the defendant will have to pay damages and reimburse you for attorney fees to the extent ordered by the court.
13. Are there other laws I should know about?
Yes. If your credit application was denied, the Equal Credit Opportunity Act requires creditors to specify why. For example, the creditor must tell you whether you were denied because you have "no credit file" with a CRA or because the CRA says you have "delinquent obligations." The ECOA also requires creditors to consider additional information you might supply about your credit history. You may want to find out why the creditor denied your application before you contact the CRA.
14. Where should I report violations of the law?
Although the FTC can't act as your lawyer in private disputes, information about your experiences and concerns is vital to the enforcement of the Fair Credit Reporting Act.
Source
Companies that gather and sell this information are called Consumer Reporting Agencies (CRAs). The most common type of CRA is the credit bureau. The information CRAs sell about you to creditors, employers, insurers and other businesses is called a credit report or consumer report.
The Fair Credit Reporting Act (FCRA), enforced by the Federal Trade Commission, is designed to promote accuracy and ensure the privacy of the information used in credit reports. Recent amendments to the Act expand your rights and place additional requirements on CRAs. Businesses that supply information about you to CRAs and those that use credit reports also have new responsibilities under the law.
Here are some frequently asked questions consumers have about credit reports and Consumer Reporting Agencies. Note that you may have additional rights under state laws.
Frequently Asked Questions
01. How do I find the CRA that has my credit report?
Contact the CRAs listed in the Yellow Pages under "credit" or "credit rating and reporting." Because more than one CRA may have a file on you, call each until you locate all the agencies maintaining your file. The three major national credit bureaus are Equifax, Experian (formerly TRW) and Trans Union.
In addition, anyone who takes action against you in response to a report supplied by a CRA, must give you the name, address, and telephone number of the CRA that provided the report.
02. Do I have a right to know what's in my credit report?
Only if you ask for it. The CRA must tell you everything in your report, including medical information, and in most cases, the sources of the information. The CRA also must give you a list of everyone who has requested your report within the past year. Two years for employment related requests.
03. Is there a charge for my credit report?
Sometimes. There's no charge if a company takes adverse action against you, such as denying your application for credit, insurance or employment, and you request your report within 60 days of receiving the notice of the action. The notice will give you the name, address, and phone number of the CRA. In addition, you're entitled to one free report a year if you can prove that:
* You're unemployed and plan to look for a job within 60 days.
* You're on welfare.
* Your report is inaccurate because of fraud.
* Otherwise, a CRA may charge you up to $8.50 for a copy of your report.
04. What can I do about inaccurate or incomplete information?
Under the new law, both the CRA and the information provider have responsibilities for correcting inaccurate or incomplete information in your report. To protect all your rights under this law, contact both the CRA and the information provider.
First, tell the CRA in writing what information you believe is inaccurate. CRAs must reinvestigate the items in question (usually within 30 days) unless they consider your dispute frivolous. They also must forward all relevant data you provide about the dispute to the information provider. After the information provider receives notice of a dispute from the CRA, it must investigate, review all relevant information provided by the CRA, and report the results to the CRA. If the information provider finds the disputed information to be inaccurate, it must notify all nationwide CRAs so that they can correct this information in your file.
When the reinvestigation is complete, the CRA must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the CRA cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the CRA gives you a written notice that includes the name, address, and phone number of the provider.
Second, tell the creditor or other information provider in writing that you dispute an item. Many providers specify an address for disputes. If the provider then reports the item to any CRA, it must include a notice of your dispute. In addition, if you are correct (that is, if the information is inaccurate), the information provider may not use it again.
05. What can I do if the credit provider won't correct the information I dispute?
A reinvestigation may not resolve your dispute with the CRA. If that's the case, ask the CRA to include your statement of the dispute in your file and in future reports. If you request, the CRA also will provide your statement to anyone who received a copy of the old report in the recent past. There usually is a fee for this service.
If you tell the information provider that you dispute an item, a notice of your dispute must be included anytime the information provider reports the item to a CRA.
06. Can my employer get my credit report?
Only if you give approval. A CRA may not supply information about you to your employer, or to a prospective employer, without your written consent.
07. Can others get a credit report that contains medical information about me?
Not without your approval.
08. What should I know about "investigative consumer reports"?
"Investigative consumer reports" are detailed reports that involve interviews with your neighbors or acquaintances about your lifestyle, character, and reputation. They may be used in connection with insurance and employment applications. You'll be notified in writing when a company orders such a report. The notice will explain your right to request certain information about the report from the company you applied to. If your application is rejected, you may get additional information from the CRA. However, the CRA does not have to reveal the sources of the information.
09. How long can a CRA report negative information?
Seven years. With the following exceptions:
* Bankruptcy information may be reported for 10 years.
* Information reported in response to an application for a job with a salary of more than $75,000 has no time limit.
* Information reported because of an application for more than $150,000 worth of credit or life insurance has no time limit.
* Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer.
10. Can anyone get a copy of my credit report?
No. Only people with a legitimate business need, as recognized by the FCRA. For example, a company is allowed to get your report if you apply for credit, insurance, employment, or to rent an apartment.
11. How can I stop a CRA from including me on lists for unsolicited offers?
Creditors and insurers may use CRA file information as a basis for sending you unsolicited offers. These offers must include a toll-free number for you to call if you want to remove your name and address from lists for two years; completing a form that the CRA provides for this purpose will keep your name off the lists permanently.
12.Do I have the right to sue for damages?
You may sue a CRA, a user or, in some cases, a provider of CRA data, in state or federal court for most violations of the FCRA. If you win, the defendant will have to pay damages and reimburse you for attorney fees to the extent ordered by the court.
13. Are there other laws I should know about?
Yes. If your credit application was denied, the Equal Credit Opportunity Act requires creditors to specify why. For example, the creditor must tell you whether you were denied because you have "no credit file" with a CRA or because the CRA says you have "delinquent obligations." The ECOA also requires creditors to consider additional information you might supply about your credit history. You may want to find out why the creditor denied your application before you contact the CRA.
14. Where should I report violations of the law?
Although the FTC can't act as your lawyer in private disputes, information about your experiences and concerns is vital to the enforcement of the Fair Credit Reporting Act.
Source
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