Credit Reports and Credit Scores

Credit Reports

A credit report contains information on where you work and live, how you pay your bills, and whether you've been sued, arrested, or filed for bankruptcy. Consumer Reporting Agencies (CRAs) gather this information and sell it to creditors, employers, insurers, and other businesses. The most common type of CRA is the credit bureau. The three major national credit bureaus are:

Equifax: 1-800-685-1111 or www.equifax.com
Experian: 1-888-397-3742 or www.experian.com
TransUnion: 1-800-916-8800 or www.transunion.com

By September 1, 2005, all consumers will eligible to receive a free annual credit report from each of the three major CRAs. To check your eligibility and order your report, your must go through www.annualcreditreport.com or call 1-800-322-8228.

Credit Score

The information in your credit report is used to calculate your credit score-a number, generally between 300-850 that rates how risky a borrower you are. The higher your credit score, the less risk you pose to creditors. Your FICO credit score is available from www.myfico.com for a fee. Free credit reports do not contain your credit score. For more information on credit scores, see Your Credit Score - Do You Know What It Is?

Click here if you don't know what your Credit Score is.

Negative Credit Information in Your Credit Report

Negative information concerning your use of credit can be kept in your credit report for seven years. A bankruptcy can be kept for ten years. 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.

Anyone who denies you credit, housing, insurance, or a job as a result of a credit report must give you the name, address, and telephone number of the CRA that provided the report. Under the Fair Credit Reporting Act, you have the right to request a free report within 60 days if a company denies you credit based on the report.

If there is inaccurate or incomplete information in your credit report:

• Contact both the credit reporting agency and the company that provided the information to the CRA.
• Tell the CRA in writing what information you believe is inaccurate.

Under The Fair Credit Reporting Act, the information provider is required to investigate and report the results to the CRA. If the information is found to be incorrect, it must notify all nationwide CRAs to correct your credit report file. If the investigation does not solve your dispute, ask that your statement concerning the dispute be included in your credit report file. A notice of your dispute must be included anytime the CRA reports the negative item.

If the information is accurate, only time, hard work, and a personal debt repayment plan will improve your credit report. Credit repair companies advertise that they can erase bad credit for a hefty fee. Don't believe it. Under the Credit Repair Organizations Act, credit repair companies can't require you to pay until they have completed promised services. They must also give you:

• a copy of the "Consumer Credit File Rights Under State and Federal Law" before you sign a contract;
• a written contract that spells out your rights and obligations; and
• three days to cancel without paying any fees.

Some credit repair companies promise to help you establish a whole new credit identity. You can be charged with fraud if you use the mail or telephone to apply for credit with false information. It is also a federal crime to make false statements on a loan or credit application, to give a false Social Security number, or to obtain an Employer Identification Number from the Internal Revenue Service under false pretences.

If you have lost money to a credit repair scam, contact your state or local consumer affairs office or the National Fraud Information Center.