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Credit Reports: What
Should You Know?
 How
do lenders determine who is approved for a credit card,
mortgage, or car loan?
Why are some individuals flooded with credit card offers while
others get turned down routinely?
Because creditors keep their evaluation standards secret, it
is difficult to know just how to improve your credit rating.
It is important, however, to understand the factors and to
review your credit report periodically for any irregularities,
omissions, or errors.
Reviewing your credit report annually can help you protect
your credit rating from fraud and ensure its accuracy.
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Credit Evaluation Factors:
Many factors determine your
credit. Here are some of the major factors
considered. |
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Age
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Residence
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"Authorized user"
payment history
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Checking & savings
accounts
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Bankruptcy
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Charge-offs
(Forgiven debt)
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Child support
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Closed accounts
and inactive accounts
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Jobs
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Payment history
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Recent loans
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Collection
accounts and charge-offs
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Cosigning an
account
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Credit limits
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Credit reports
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Debt/income ratios
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Department store
accounts
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Payment
history/late payments
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Finance company
credit cards
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Income/income per
dependent
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Mortgages
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Revolving credit
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Name/alias
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Number of credit
accounts
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Fraud
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Inquiries
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These factors may be used, and
weighted, in determining credit decisions. Credit reports
contain much of this information.
Obtaining Your Credit Reports
Credit reports are records of
consumers' bill-paying habits. Credit reports are also called
credit records, credit files, and credit histories and are
collected, stored, and sold by three credit bureaus, Experian,
Equifax, and TransUnion.
Recent changes to the Fair
Credit Reporting Act (FCRA) require that each of the three
credit bureaus provide you with a free copy of your credit
report, at your request, every 12 months.
If you have been denied credit
or believe you've been denied employment or insurance because
of your credit report, you can request that the credit bureau
involved provide you with a free copy of your credit report -
but you must request it within 60 days of receiving the
notification.
Disputing
Errors in Your Credit File
The Fair Credit Reporting Act (FCRA)
protects consumers in the case of inaccurate or incomplete
information in credit files. The FCRA requires credit bureaus
to investigate and correct any errors in your file.
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TIP:
If you find any incorrect or incomplete information in
your file, write to the credit bureau and ask them to
investigate the information. Under the FCRA, they
have about thirty (30) days to contact the creditor and
find out whether the information is correct. If not, it
will be deleted. |
Be aware that credit bureaus are
not obligated to include all of your credit accounts in your
report. If, for example, the credit union that holds your
credit card account is not a paying subscriber of the credit
bureau, the bureau is not obligated to add that reference to
your file. Some may do so, however, for a small fee.
To read the rest of this
article,
click here or go to
www.eSullivan.net and click on the Newsletter section.
If you have any questions about interpreting your Credit
Report, please give us a call at 301-657-8080.
 As always you can call our offices if you have any
questions about these or any other accounting, tax,
financial planning or insurance related issues, at 301-657-8080.
Regards, Paul Sullivan, CPA
President, Sullivan & Company |
