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:
- When you apply for a new credit card the creditor
requests a copy of your financial history from the reporting agencies.
- The creditor uses your
credit reports and scores along with income and debt
information to determine what rates to offer.
- You start to use the new credit card and the
creditor reports your activities to the credit reporting agencies every 30
days.
- The credit reporting agencies update your credit
report as they receive new information from creditors or lenders.
- 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!
