Your Credit Report

What information is contained in a credit report

Your credit report contains information about your credit worthiness to potential creditors, such as credit card companies, mortgage companies, auto finance companies, and other businesses that you might seek credit from. The information in your credit report contains information about all credit that you have applied for in the last 7 years and details how long an account has been open and the payment history.

There are 3 major credit reporting bureaus that maintain credit reports on you – TransUnion, Equifax, and Experian. However, the information contained in your credit report is not necessarily the same from TransUnion, Equifax, and Experian. Also, when you apply for credit, the potential creditor will not necessarily look at all 3 credit reports, but usually only 1 or 2. The higher your credit score, the lower the interest rate that you will pay. A separate company called Fair Issac calculates your credit score, based on the information contained in your credit reports.

How to get a copy of your credit report

You can get a free copy of your credit report every 12 months from TransUnion, Equifax, and Experian. If you have access to the Internet, the fastest and easiest way is via the Federal Trade Commission’s website Annualcreditreport.com or via phone at 877-322-8228 or by printing out the request form and mailing it in. Do not be fooled by ads saying you can get a “free” copy of your credit report from Freecreditreport.com or other websites. It is not free – you have to give them a credit card number and sign up for their “credit monitoring” service!

How to correct inaccurate information in your credit report

Once you get your credit report, it is important to make sure that all the information is accurate. Sometimes, an account that does not belong to you will appear on your credit report, because of a similar name or social security number. In addition to making sure all the accounts listed are yours, make sure that your accounts are being reported accurately for example, if an account is marked as “open” when you really closed it years ago.

You can dispute inaccurate information in your credit report by writing a letter to the credit bureau and stating why you believe the information is incorrect. The address to send the dispute to is generally located at the end of the credit report. In your dispute letter, you should enclose a copy of your driver’s license or other form of identification and a copy of the credit report that you believe are inaccurate. Make sure to keep a copy of all information that you send (including the dispute letter) and send the dispute letter and supporting documentation via certified mail, return receipt requested and also via regular mail. Send a copy of your dispute letter to the company who placed in the inaccurate information in your credit report too.

Consumer credit reports are governed by the Fair Credit Reporting Act 15 U.S.C. § 1681, et seq. The Act requires that not only the credit bureaus (Experian, TransUnion, and Equifax) report accurate information, but also that the creditor provide accurate information about the consumer. Once you send a dispute letter, the credit bureau has 30 days to investigate and send you a report on the outcome of their investigation. Once a credit bureau receives a dispute letter, most of them will forward it to the creditor who placed the information in the credit report and generally, that creditor will tell the credit bureau that the information is correct, which the credit bureau will report to you.

If you still believe that the information is not accurate, send another dispute letter. Another thing you can do is require the credit bureau to place a 100-word statement that you write in your credit report as to why you believe the information is not correct. If the credit bureau cannot verify the dispute, it must delete the information from your credit report. All accurate information, even if it is derogatory, will stay on your credit report for 7 years from the date it was first reported. A bankruptcy will stay on your credit report for 10 years.

Beware of some creditors and/or collection agencies who attempt to “re-age” information in your credit report. This happens when “new” information is placed in your credit report about an account, in an attempt to re-set the 7 year clock or re-set the statute of limitations (in Pennsylvania, the statute of limitations on a contract is 4 years – which begins to run from the date of default or date of last payment, whichever is sooner). If you do not consent to the account being “re-aged” then it is illegal under the Fair Credit Reporting Act.

What to do if the creditor or credit bureau refuses to correct your credit report

If you have disputed inaccurate information with the company who placed the information in your credit report and the credit bureau has not removed the information, under the Fair Credit Reporting Act, you have the right to file a lawsuit against the credit bureau and the company who placed the inaccurate information in the credit report. Beware that you have 2 years from the date that you discover the violation or 5 years from the date that the violation actually occurred. You can file a lawsuit in any state or federal court, though it is generally cheaper and easier to bring suit in your local small claims court. It is advisable that you consult with an attorney before filing any lawsuit.

Credit report scams to watch out for

The Credit Repair Organizations Act, 15 U.S.C. § 1679, et seq., governs any individual or company that provides any type of service relating to repairing or fixing credit reports. The Act prohibits the individual or company from making any false statements about credit repair and makes it illegal for these operations to charge you until they have fully performed their services.

Beware of any person or company who claims that they can “erase” or “remove” information from your credit report, such as bankruptcies, delinquencies, charge-offs, repossessions, judgments, foreclosures, late-payments, tax liens, or garnishments. It is a crime to file a frivolous dispute letter in an attempt to get derogatory, but correct, information removed from a credit report. Only information that is inaccurate can legally be removed from a credit report.

Also beware of any person or company that claims that they can create a second or new credit report for you. The scammer will tell you that all you have to do is to use a different social security number or apply for a tax identification number from the IRS and use it instead of your own social security number when applying for credit. This practice is called “file segregation” which is a fraud and is prosecuted as a felony and you could face fines and jail. It is a federal crime to make any false statement on a loan or credit application.

Any individual or company who, for a fee, offers to “repair” your credit is probably going to rip you off. Why pay someone hundreds or thousands of dollars to dispute inaccurate items in your credit report when you can do it yourself for free?