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 What is a Credit Report?

Credit reports are documents which are created and assembled by credit reporting agencies (CRA). there are 3 main credit reporting agencies in the United States, including:

  • Experian;
  • TransUnion; and
  • Equifax.

Credit reports may contain detailed information about an individual, their financial history, and their financial status. These reports may also include how many credit cards an individual has as well as the standing of the accounts.

Businesses and lenders use the information in an individual’s credit report to assign them a credit score. A credit score is based on an individual’s:

  • Payment history and whether they pay obligations on time or only when they are past due;
  • Outstanding balances on any credit they have;
  • The length of credit history;
  • Applications for new credit accounts; and
  • Types of credit accounts, such as:
    • a mortgage;
    • car loans; and
    • credit cards.

A credit reporting agency calculates an individual’s credit score based upon the information contained in their credit report. An individual can find their credit score on a credit report of their credit card statement.

When an individual applies for credit, such as a mortgage loan, the lender will typically tell the individual what their credit score is at that time. An individual’s credit score may range from 300 to 850.

The higher the number, the better the individual’s credit score. A higher score indicates an individual is creditworthy, or likes to pay back their loan on time as promised in their loan agreement.

It is important to note that an individual can have more than one credit score. They may be calculated by different lenders, companies, or the three credit bureaus.

An individual’s credit score is important because it affects whether they are able to obtain credit, which may include a mortgage to purchase a home as well as what their interest rate will be. A credit score may also affect whether an individual can rent a home or an apartment.

In certain cases, an individual’s credit score may affect whether they can get a job. An automobile insurance company will often charge a higher interest rate for a driver who has a bad credit score.

When an individual is having a utility service turned on at a new residence, the utility company will check the individual’s credit to determine whether or not they will be required to pay a security deposit. An individual may discover that they have a bad credit score when they are refused a loan for which they have applied.

If an individual finds that their credit score is low, there are steps they can take to improve the score. An entity is required to provide an individual the name, address, and telephone number of the credit reporting agency (CRA) that provided the report if, based on that information, an individual is denied:

  • Credit;
  • Housing;
  • Insurance; or
  • A job.

Pursuant to the Fair Credit Reporting Act (FCRA), an individual has the right to request a free copy of their report within 60 days if a company denies them credit based on the report. There are some companies that promise to fix or repair an individual’s credit for a price.

However, there is no way to remove negative information from an individual’s credit report if that information is accurate. If an individual does have a low credit score, they need to add positive information to their report.

This can be done by obtaining credit, but not more than what the individual can handle financially so they make their payments on time. An individual’s payment history affects their credit score more than any other factor.

Payment history is 35% of an individual’s credit score. Because of this, taking care of past due accounts is critical to credit repair.

The worst account status is a charge off. This occurs when an account is 180 days past due.
If an individual does have past due accounts, they can contact their creditor and inquire how to get the account back to current status. Creditors may be willing to waive penalties or fees or to spread the balance out over several payments.

How Are Credit Reports Generated?

A credit report is generated by the credit bureaus. Credit bureaus gather information regarding an individual’s credit history.

An individual’s credit history is gathering an individual’s history of acquiring debt and paying off that debt and selling that information to businesses which are permitted to access credit reports. A credit bureau obtains most of its data from creditors.

However, data may also be found by searching court records for any:

  • Lawsuits;
  • Judgments;
  • Bankruptcy filings; and
  • Any county records to find legal claims.

What Do Credit Reports Include?

A credit report includes personal data such as:

  • Any names the individual previously went by;
  • All past and present addresses;
  • The individual’s Social Security number;
  • Employment history;
  • Marriages; and
  • Divorces.

Credit data will include:

  • The names of an individual’s creditors;
  • The types of numbers and accounts they hold;
  • When the accounts were opened;
  • Payment history on those accounts;
  • Credit limits or the original amounts of loans; and
  • Current balances.

A credit report will also show if there is any collection activity on an account which is disputed.

Is There Anything I Can Do if There Are Mistakes in My Credit Report?

If there are mistakes on an individual’s credit report, there are some steps they can take to correct the issues. An individual can make a list of everything which appears to be out of date, since the credit bureaus should remove that information from the individual’s credit report.

An individual should also identify any other misleading or incorrect information. After an individual identifies all of the mistakes, they should complete a request for reinvestigation form which is provided by the credit bureau.

An individual can also send a letter which lists each incorrect item and provides an explanation of why it is incorrect. Once the credit bureau receives the request, an investigation will be conducted and the credit bureau will contact the individual within 30 days.

What if I Do Not Hear Back within 30 Days?

If an individual does not hear back from the credit bureau within 30 days, they should follow up with a letter. The credit bureau can perform a rush investigation, if necessary.

If the individual is correct or if the information can no longer be verified, the information should be removed from the individual’s credit report.

What if I Did Not Make Any Progress with the Credit Bureau?

If an individual is not able to make any progress with a credit bureau, an individual can contact the creditor directly and request in writing that the information be removed by a party who is capable of doing so. Creditors are not permitted to report information which is known to be inaccurate.

Do I Need a Lawyer to Help Me with My Credit Problems?

Handling your debts is often frustrating and confusing. It may be helpful to have the assistance of a credit lawyer who can help you sort out your financial issues as well as offer solutions, which may include negotiating with your creditors and advising you regarding the possibility of bankruptcy.

Your lawyer will be familiar with the laws in your state governing consumer credit and will help protect your interests. If you believe a credit bureau is wrongfully including information on your credit report or if you wish to provide an explanation for a particular entry, you are permitted to have a brief statement put in your report.

The credit bureau is required to provide a copy of your statement, or a summary of the statement, to anyone who requests the report.

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