Credit Reporting ......

What's a Consumer Credit Report?

A consumer credit report is an objective record of an individual's credit payment history. Credit grantors are permitted by law to review your credit report to objectively determine whether to grant you credit. There are 190 million credit active people in the United States who have a charge account, car loan, student loan, or home mortgage. As these consumers pay their bills, most lenders report their credit payment history information to credit bureaus. So, most of the information in your consumer credit report comes directly from the companies with whom you do business. The best way to verify the accuracy of that information is to get your own report.

What does a credit report contain?

A consumer credit report contains four types of information -- identifying information, credit information, public record information, and inquiries.

•  Identifying information -- includes your name, current and previous address, Social Security Number, telephone number, Date of Birth, and current and previous employer.

•  Credit history -- includes your history of paying bills with credit grantors such as retail stores, banks, finance companies, and mortgage companies.

•  Public records -- includes items that may affect your creditworthiness, such as tax liens, judgments, bankruptcies, etc.

•  Inquiries -- Lists the credit grantors and other authorized parties who have received your credit report. Inquiries also contain lists of the companies that receive your name and address information for the purpose of offering you credit. 

What doesn't it contain?

Your consumer credit report does not contain information about your race, gender, national origin, religious preference, medical history, personal lifestyle, checking or savings account information, personal background, political preference, or criminal record.

Accepted or rejected applications

You have the right to know whether your application for credit was accepted or denied within 30 days of filing it. You also have the right to know why it was denied. The creditor must either, immediately give you the specific reasons why your application was denied, or provide you with the reasons if you ask the creditor within 60 days.  Learn more about how to improve your credit if you have been denied.

Requirements for accessing credit reports

To guard against abuse and to protect your privacy, all businesses must meet certain requirements before they are allowed to access credit information.

The Credit Reporting System

The modern credit reporting system helps credit grantors approve loans and credit in minutes. The system provides continuously updated information to make fast, accurate decisions for most consumer credit transactions. The credit reporting system benefits everyone. Consumers with a credit record reflecting prompt payment find it comparatively easy to open new or expanded credit lines.

The credit reporting system opens new opportunities to obtain credit; speeds credit decisions; and makes our credit-based economy possible.

What creditors look for?

Creditors review credit applications primarily in relation to risk. They consider information such as: your income; how long you have lived at your current address; what kinds of assets you have; the balances in your checking and savings accounts; your promptness in paying bills; how long you have been working for the same company; and how much you owe other creditors. In deciding whether to grant a loan, creditors make a judgment about the credit worthiness and potential risk of each applicant. 

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) protects your rights as a credit active consumer. The law, which became effective in 1971, places limits on who may see a copy of your credit report. While you may request a copy at any time, no one else may legally review your report unless they intend to conduct a credit transaction, make an employment decision, or underwrite insurance. Your credit report may also be reviewed in response to a court order or federal grand jury subpoena.

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