About Credit

There are three national credit-reporting companies (repositories) – Equifax, Experian, and Trans Union – that receive reports on how you repay your debt and store this information in the giant databases.

What is a credit report?

A credit report is a record of your credit activities. It includes information on where you live, how you pay your bills, how regularly you make your payments, and whether you’ve been sued, arrested, or filed for bankruptcy.

Who is allowed to see your credit report?

Credit repositories can provide information only to the following requestors;
1) creditors who are considering granting or have granted you credit;
2) employers considering you for employment, promotion, reassignment, or retention;
3) insurers considering you for an insurance policy or reviewing an existing policy;
4) government agencies reviewing your financial status in connection with issuing you certain licenses or government benefits; and
5) anyone else with a legitimate business reason for needing the information (such as a potential landlord).
Credit repositories also furnish reports if so required by court orders or federal jury subpoenas and they will also issue your report to a third party if you give them written instructions to do so. Mortgage Lenders depend on these reports to determine the creditworthiness of prospective borrowers.

What type of information is reflected in the credit report?

There are usually four types of information:
1. Identifying information: Your name (including if you are Sr., Jr. or a III), nicknames, current and previous addresses, social security number, year of birth, current and previous employers.
2. Credit information: The accounts you have with banks, retailers, credit-card issuers, and other lenders. The accounts are listed by type of loan (mortgage, student loan, auto loan, revolving credit), the date you opened the account, your credit limit or the loan amount, any cosigners of the loan, and your payment pattern over the past two years.
3. Public recording information: State and county court records on bankruptcy, tax liens, or monetary judgments. Some credit companies list non-monetary judgments as well.
4. Inquiries: The names of those who have obtained copies of your credit report within the last six months (two years for employment purposes).
Where do the credit-reporting companies get their information?
From the parties that have previously extended credit to you, such as the department store that issued you a credit card or the bank that issued you a personal loan.

Do the credit-reporting companies make the decision whether to grant me the loan?

No. The credit-reporting companies only supply the information about your credit history. It is the lenders themselves who make a decision whether to grant you credit.

Why should I obtain a copy of my credit report?

It is important to see a copy of your credit report before you apply for a mortgage or credit card. Errors in credit reports are not uncommon – they are simply the result of human error. For example a misspelling of your name or a mistake in your street address. If you find an error on your credit report, notify the credit-reporting company immediately.

How long does information stay on my credit report?

Generally repository must automatically delete information on adverse credit instances that are more than seven years old and any bankruptcies that are more than ten years old.

What is a FICO score?

A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. Fair Isaac began its pioneering work with credit scoring in the late 1950s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrower’s credit history into a single number. Fair, Isaac & Co. and the credit bureaus do not reveal how these scores are computed. The Federal Trade Commission has ruled this to be acceptable. Credit scores analyze a borrower’s credit history considering numerous factors such as:

-Late payments
-The amount of time credit has been established
-The amount of credit used versus the amount of credit available
-Length of time at present residence
-Employment history
-Negative credit information such as bankruptcies, charge-offs, collections, etc.

There are really three FICO scores computed by data provided by each of the three bureaus – Experian, Trans Union and Equifax. Some lenders use one of these three scores, while other lenders may use the middle score.

Equifax
P.O. Box 740241
Atlanta, GA 30374
  800-685-1111  
www.equifax.com

Experian
P.O. Box 2002
Allen, TX 75013
  888-397-3742  
www.experian.com

Trans Union 
P.O. Box 1000
Chester, PA 19022
  866-887-2673  
www.transunion.com