You may already know that one of your rights under the Fair Credit Reporting Act (FCRA) requires credit reporting agencies to provide you with a free copy of your credit report once a year. However, you may not know exactly why that’s important to you, how to obtain your free credit report, or how to assess it for accuracy and correct any errors you may find.
Your Credit Report
Your credit report is a record of your debts, payment history, and other information assembled to help lenders and others decide whether they want to loan you money, rent you an apartment, or do other business with you. Your credit history and credit score impact not only your access to credit but also how much you pay when you take out a loan or conduct certain other types of business.
The information on your credit report includes:
- Your current and past addresses
- Employment information
- Credit account histories
- Certain other monthly payment accounts, such as some utility accounts
- Past, or open, bankruptcies
- Accounts placed with collection agencies
- Judgments against you
Although these reports would theoretically be identical, or nearly so, there are often significant variations. Credit reporting is an imperfect process at best, and it is not unusual for one agency to report an account while another omits that same account.
Potential creditors and others may review the information in your credit report directly to make decisions about doing business with you, or they may rely on your credit score.
What is a Credit Score?
Your credit score is a three-digit number used to give a lender, potential landlord, or other authorized person a high-level idea of your creditworthiness. However, the phrase “your credit score” is a bit misleading. Credit scores from each of the three major credit bureaus are often different, and there are a variety of other aggregate or special-purpose credit scores.
While the weighting may be somewhat different, and the accounts included in the calculation may vary, key factors that impact your credit score include:
- Your payment history
- The age of your credit accounts
- The mix of types of credit included
- Your total debt
- New credit accounts
The Impact of Your Credit Report and Credit Score
Your credit history and credit score impact many areas of your life. Some people mistakenly believe that credit reports and credit scores don’t matter if you seldom or never rely on credit. However, your credit report determines much more than whether or not your credit card application is approved. For instance:
- A negative credit history or lower credit score may mean you pay more interest if you are approved for a car loan, home loan, or other credit
- Your credit report and credit score may impact the rates you pay for other purchases, such as automobile insurance
- Landlords may use your credit history to determine whether to rent to you, or how large a deposit to require
- Some employers may review your credit report as part of the application process, although there are some limits on how they may use this information
Clearly, it’s important that you know what is on your credit report, so invest the time and effort in correcting any errors or reporting FCRA violations.
Reviewing Your Credit Report
In 2013, the Federal Trade Commission (FTC) reported that 20% of consumers studied had identified a verifiable error on at least one of their credit reports. That means one in five U.S. adults is potentially disadvantaged by inaccurate credit reporting.
Make Sure Your Free Credit Report is Free
“Free credit report” sounds like a pretty straightforward benefit of the Fair Credit Reporting Act. However, if you search “free credit report” online, you’re likely to find a confusing mix—returning results that include offers intended to lure you into purchasing other products or signing up for free trials to access your “free” credit report.
You can obtain a truly free credit report once each year by contacting each of the three major national credit bureaus (Experian, TransUnion, and Equifax) directly. There are sites where you can request free credit reports from any or all three of the major credit bureaus as well. These sites tend to offer additional products, like access to your credit score, but remember you do not need to purchase anything to view one of your free credit reports.
Identifying Errors and Violations in Your Credit Report
When you review your credit report, you’ll obviously be looking for inaccurate information. This includes:
- Accounts that aren’t yours
- Inaccurate dates or balances on accounts
- Misinformation about delinquencies
- Accounts listed as yours, though you were only an authorized user
Sometimes, this type of incorrect information ends up on your credit report by mistake. Creditors or credit bureaus may inadvertently mix accounts, transpose numbers, or fail to make updates. However, some of that misinformation is there because a creditor or collection agency intentionally misreported it, or because the credit reporting agency didn’t do its job.
- The FCRA requires that most accounts be removed from your credit report after seven years, but some creditors “re-age” and re-report those accounts to keep them on your credit history longer.
- Some creditors and collection agencies report debts as delinquent after they have been discharged in bankruptcy, although the FCRA prohibits this
- Some creditors and debt collectors re-report erroneous or expired information after you have disputed the entry and the credit reporting agency has removed it
Fighting Credit Reporting Errors
Sometimes, simply filling out a dispute form or sending a letter to the credit reporting agency is enough to get incorrect or outdated information removed from your credit report. But, credit reporting agencies aren’t always diligent, and creditors aren’t always honest. If you do succeed in getting an item removed, you’ll want to monitor your credit report to make sure it doesn’t reappear.
If you are having trouble getting erroneous or stale information removed from your credit report, or if deleted information reappears, contact Barshay Sanders PLLC. You may be entitled to damages.