Credit Report FAQs
In this section you will find answers to the
most frequent questions we receive about credit reports.
If you have a question we do not address, please ask us
directly! Please check our Mortgage
Terms Glossary for commonly used mortgage terminology. You will find more information about how you can get a free copy of your credit report annually at the Federal Trade Commission.
What is a credit report?
Do I have a right to know what's in my credit report?
What type of information do credit bureaus collect and sell?
What is credit scoring and how does it affect me?
What can I do to improve my credit score?
What happens if I am denied credit or don't get the terms I want?
Fair Credit Reporting Act
Your credit payment history and profile is the makeup of a credit report. These files or reports are maintained and sold by "consumer reporting agencies". One type of consumer reporting agency is commonly known as a credit bureau. The three credit bureaus are Equifax, Experian, and TransUnion. You have a credit record with these agencies if you have ever applied for a credit or charge account, a personal loan, or a job. Your credit record contains information about your income, debts, and credit payment history. It also indicates whether you have defaulted on any debts, have any outstanding judgments or child support, and whether or not you have any bankruptcies.
Of course. By law, these agencies must give you a free credit report annually. To get copies of your credit report, contact the three major credit reporting agencies:
Equifax
Equifax Credit Information Services, Inc.
P.O. Box 740241
Atlanta, GA 30374
To order report: 1-800-685-1111
To report fraud: 1-888-766-0008
Experian (formerly TRW)
Experian National Consumer Assistance Center
P.O. Box 2002
Allen, TX 75013
To order report: 1-888-379-3742
To report fraud: 1-888-379-3742
TransUnion
TransUnion Consumer Disclosure Center
P.O. Box 1000
Chester, PA 19022
To order report: 1-877-322-8228
To report fraud: 1-800-680-7289
These agencies may charge you up to $9.00 for your credit report, but everyone gets one free credit report per year! Go to Free Annual Credit Report for your free annual credit report. There is no obligation as this service is mandated by law.
Credit bureaus collect and sell four basic types of information:
Identification and Employment Information Your name, birth date, Social Security number, employer, and spouse's name are routinely recorded in your credit report. They may also provide information about your employment history, home ownership, income, and previous address, if a creditor requests this type of information.
Inquiries CRAs must maintain a record of all creditors who have asked for your credit history within the past year. It is generally beneficial to keep the number of inquires as low as possible.
Payment History Your accounts with different creditors are listed, and the balances, high balances, and outstanding balances are listed. Related events, such as referral of an overdue account to a collection agency, charge off accounts or other delinquencies may also be noted.
Public Record Information Events that are a matter of public record, such as bankruptcies, foreclosures, or tax liens, may appear in your report.
Credit scoring is a system creditors use to help determine your creditworthiness. Information about you and your credit experiences, such as your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report. The credit agencies use sophisticated algorithms to assign a score representing your creditworthiness based on your credit history, payment history, number of accounts, balance of existing accounts, and delinquent accounts, if there are any.
Credit scoring models are complex and often vary among creditors and for different types of credit. If one factor changes, your score may change -- but improvement generally depends on how that factor relates to other factors considered by the model. Only the creditor can explain what might improve your score under the particular model used to evaluate your credit application.
Nevertheless, scoring models generally evaluate the following types of information in your credit report:
Have you paid your bills on time? Payment history is a major factor in credit scoring. If you have paid bills late, have collections, or declared bankruptcy, these events will not reflect well in your credit score.
How long is your credit history? Generally, the longer your history of holding accounts is, the more trusted you will be as a borrower.
Have you applied for new credit recently? If you have many recent inquires this can be construed as being negative by the credit reporting agencies. Only apply for credit when you really want it.
How many and what types of credit accounts do you have? Although it is generally good to have established credit accounts, too many credit card accounts may have a negative effect on your score. In addition, many models consider the type of credit accounts you have. It is important to not avoid them altogether, though. Having three to four credit cards is a good baseline.
What is your outstanding debt? It is important that you are not using all the debt that you have. If all of your credit cards are maxed out, your scores will reflect that you are not managing your debt wisely. DO NOT USE MORE THAN FITY PERCENT OF YOUR AVAILABLE CREDIT ON EACH CREDIT CARD!
If you are denied credit, the Equal Credit Opportunity Act requires that the creditor give you a notice that tells you the specific reasons your application was rejected or the fact that you have the right to learn the reasons if you ask within 60 days. Indefinite and vague reasons for denial are illegal, so ask the creditor to be specific. Acceptable reasons include: "Your income was low" or "You haven't been employed long enough." Unacceptable reasons include: "You didn't meet our minimum standards" or "You didn't receive enough points on our credit scoring system."
If a creditor says you were denied credit because you are too near your credit limits on your charge cards or you have too many credit card accounts, you may want to reapply after paying down your balances or closing some accounts. Credit scoring systems consider updated information and change over time.
If you've been denied credit, or didn't get the rate or credit terms you want, ask the creditor if a credit scoring system was used. If so, ask what characteristics or factors were used in that system, and the best ways to improve your application. If you get credit, ask the creditor whether you are getting the best rate and terms available and, if not, why. If you are not offered the best rate available because of inaccuracies in your credit report, be sure to dispute the inaccurate information in your credit report.
The Fair Credit Reporting Act (FCRA) is designed to help ensure that CRAs furnish correct and complete information to businesses to use when evaluating your application.
Your rights under the Fair Credit Reporting Act:
- Any company that denies your application must supply the name and address of the CRA they contacted, provided the denial was based on information given by the CRA.
- You have the right to a free copy of your credit report when your application is denied because of information supplied by the CRA. Your request must be made within 60 days of receiving your denial notice.
- You have a right to add a summary explanation to your credit report if your dispute is not resolved to your satisfaction.
- You have the right to receive a copy of your credit report. The copy of your report must contain all of the information in your file at the time of your request.
- You have the right to know the name of anyone who received your credit report in the last year for most purposes or in the last two years for employment purposes.
- If you contest the completeness or accuracy of information in your report, you should file a dispute with the CRA and with the company that furnished the information to the CRA. Both the CRA and the furnisher of information are legally obligated to reinvestigate your dispute.
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