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Back to School: Credit Reporting 101
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!
Jobwerx
makes no representation as to the accuracy of information transmitted
herein.
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