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About Credit Reports & Scores (FICO)

What Is a Credit Report?

Nearly every adult person in the U.S. has a credit report that is maintained
by one or more Credit Reporting Agency (CRA). The information contained in
these reports is updated and made available mostly as a record of how you
have borrowed money, received goods or services on credit, and thereafter
repaid the debt. They can be used by a potential lender, employer, landlord,
etc.

What is Reported in Your Credit Report?

Your credit report will begin with personal information such as name, date
of birth, address, social security number, employment, etc. It may also include
previous employers and addresses. The report will go on to list past and current
credit accounts. These may include unsecured credit cards, store credit cards, gas cards, auto loans/leases, equity lines of credit and home mortgages, to name a few. The report will provide further information on past/present accounts, indicating how often the account was 30, 60, or 90 days delinquent. If and/or when the account has been charged off or sent for further collection action. The report can also include information sent by a debt collector. Matters of public record are often included in your file such as court judgments, foreclosures, tax liens, and bankruptcies, as examples. It will normally list when the account was opened, if it is current, the balance owed, past due amounts, and date of last activity.

What is the Role of the Credit Agencies?

The credit reporting agencies simply receive, manage and post the information provided to them by banks and other institutions or individuals. Nearly all major credit grantors provide account information to the CRA's. Most any circumstance you enter into when you apply for credit will involve the lender obtaining at least one of your reports from the major 3 CRA's. There is a constant stream in exchange of information. If you have an account with someone who, in the normal course of conducting its business, reports information on its accounts to the CRA's, then they probably update the CRAs once a month or more.

What Is a FICO Score?

Most lenders will now rely on an overall credit score when evaluating whether or not to extend a consumer credit. This number is often referred to as a FICO score (More info on FICO scores is available on-line at www.fairisaac.com). This score is calculated using many factors and can differ depending on which CRA is providing the report. The scores range from 300 to 850. A score of 680 or higher is usually considered good.

The scoring system is not perfect. In fact, the score provided to you by a CRA is often different than the one they provide to prospective or current creditors and lenders.

1. Always pay bills in a timely manner - Payment history is considered to be one of the most important factors in determining your FICO score. How high your credit balances are can indicate how well you manage your credit. Delinquent payments will reflect negatively and your all three credit reporting agencies keep track of your payments (consistent or not) for 7 years, so make sure that your records are spotless.
2. Use different types of credit actively over the years - The longer your maintain your credit, the better. Time becomes a major factor in your score, as well. Keeping credit accounts open and used (active) for an extended period of time (7+ years) gives you the appearance of a reliable, established borrower. You should also maintain a variety of credit and loan accounts.
3. Avoid too much debt - Be a responsible consumer. Using your credit actively and regularly is good for your credit score, but don't max out your credit cards or carry balances that are considered to be too high. Try and keep your credit card balances at about 30-35% of your credit line, on average.
4. Apply for credit with some self control - Too many authorized inquiries may lower your FICO score and opening too many new accounts in short amount of time can make you look risky to potential creditors. Only apply for the credit accounts that you truly want to keep open, active, and paid on time for the long haul.
5. Stay positive - Negative records such as bankruptcies, tax liens, charge-offs, judgments, and anything in collections will remain on your credit report for 7-10 years and can damage your FICO score. The only way to prevent such records is by being responsible for your credit and monitoring your credit reports monthly for signs of identity theft.

Methods of Dispute

It is a fairly regular occurrence to find incorrect information in your credit report. The Fair Credit Reporting Act (FCRA) provides consumers with the legal right to dispute and have corrected or deleted any inaccurate or out of date information. Here are a few examples of why you would dispute an item or account:

• If there are any erroneous items on your credit report
• If there is any information that does not belong to you
• If the account amount or outstanding balance is wrong
• If any date is be wrong (date of last activity, date opened, date closed, etc.).
• If you disagree with the amount of days that a payment is late (30, 60, 90 days).
• If your name is spelled wrong or there is a previous marital name no longer in use.
• If the account number is wrong.
• If you have no knowledge or disagree that a collection agency has handled your account.

The CRA's are required to investigate any dispute you send in writing and follow up with the consumer with in 30 days, although they can request an additional 15 days if the consumer provided additional detail on the dispute within the 30 days. The CRA will go to the creditor that provided them the information in dispute as part of the investigation process. Creditors and others that provide information to the CRA's that is thereafter included in your credit report are known as "furnishers". The furnisher that supplied the information in dispute has an obligation to the CRA to re-investigate and, thereafter, provide the CRA with up to date, complete and accurate information.

Once the dispute has been resolved and the information corrected, do not assume that it is over. Unfortunately, corrected or deleted information has a tendency to re-appear. To ensure accuracy and accountability with your reports, you should get another report (in 90 days) from the CRA that you had the dispute with and verify it has been corrected or removed.

You may find that the inaccurate, incomplete or out of date information is on all 3 of the major credit reporting agencies files. You can engage your dispute with all 3 CRA's at the same time or complete the dispute outlined above and forward the results to the remaining two CRA's.

You can request that all the CRA's provide notice of the correction to prior users of the information. They will be required to do so but only upon your request. This additional notice to users only extends to the prior 6 months (2 years if for employment) and only to those you designate notice be sent to.

You can direct your attention to the furnisher of information first but they have no legal obligation to you for investigation. It is quite backwards really. The CRA's are legally obligated to investigate your dispute and only report complete, accurate and complete information. The furnisher is not obligated to work directly with you. However, once a formal written dispute is sent to the CRA, the furnisher is obligated to complete an investigation and inform the CRA of its results. If they do not investigate and return results to the CRA, the information is supposed to be deleted. The dispute process is relatively simple but aggravating at times for the consumer. Reasons are human error, waiting, re-asserting yourself if the CRA is uncooperative etc. It is important to be patient and persistent when engaging in a dispute.

Out-of-Date Information

Most negative information must be removed from your report after a prescribed period of time. Outdated information may not be reported. In most cases, a CRA may not report negative information that is more than seven years old from the date of last activity such as:

• Accounts sent for collection
• Accounts charged off
• Judgments
• Paid tax liens
• Some criminal records (criminal convictions can remain on the report forever)

It is important to note that information that reflects as a positive is not governed the same way. The FCRA is for consumer protection only as it applies to bad or negative information.

Disputed Item Verified

If the disputed item is verified and deemed to be accurate, complete, and current, you have other options. The FCRA provides consumers the ability to submit a statement to the CRA's that they may or may not include in your report. It is best to keep the statement brief. The statement would include an explanation of the negative item in your report.

THREATS OF DAMAGE TO YOUR CREDIT REPORT

If you are behind on payments, a creditor may threaten to report damaging information to the CRA's. Often times this is a tactic used to pressure you into making a payment. The fact is, though, that most creditors' reporting systems are programmed to automatically update the CRA's without human involvement. If you are having financial difficulty, don't allow a creditor to distract you from meeting your families' important needs just because you may end up with a blemish on your credit file. You must take full financial stock, both present and future and prioritize your debt. If a debt collector is making these threats, the same principle applies. Indeed, there may be other options available to you if a debt collector is making threats or harassing you. Please contact CRN for additional options.

Credit Repair for a Fee?

It is important to note that there are many programs advertised and promoted on-line as Credit Repair Organizations. Essentially, a recurring theme with these organizations is that they state they can clean up your credit for a fee. The fact is, though, that you can do the same thing for yourself with basic knowledge and the investment of your own time.

Be wary if someone says they can erase negative marks on your credit report. If the information contained on your credit report is accurate, complete, and current, it would be very difficult to have it removed before 7 years.

If the approach is to attempt to create some new credit file for you or create some new identity and if the intent is to defraud creditors (which would more than likely be easy to prove if your credit file is in poor shape), then it is illegal.

Legal Remedies

When sending written communication to both the furnisher and the CRA, always do so by way of certified mail, return receipt requested. Keep a file of all communications and accurate notes of conversations and include return receipt stubs from mailings.

If, in the event, there are violations or damages caused by the CRA's or, in some cases, the furnisher, your diligence in keeping complete and organized files will assist you in the event of litigation.

How to Obtain Your Credit Report

The following information contains all of the phone numbers and addresses needed to correspond with the 3 major Credit Reporting Agencies along with their current website information. It is likely that all three credit reporting agencies keep and maintain records about you and your credit, so it is important to obtain all three when wanting to scrutinize the current and accurate credit information they report on you.

Equifax

Order by phone, 1-800-997-2493 OR 1-800-685-1111 or online at
http://www.equifax.com

Trans Union LLC

Order by phone, 1-800-888-4213 or online at http://www.transunion.com/Personal/OrderCreditReport.asp

Experian

Order by phone,1-888-397-3742 OR 1-800-682-7654 or online at http://www.experian.com/consumer/index.html

IMPORTANT:

Many states have made recent changes to the credit laws which enable the consumer to receive a free credit report from each credit reporting agency, each year. Check with each credit bureau, or your local legislative office, to determine if your state is one that has enacted this law. Colorado, Georgia, Maryland, Massachusetts, New Jersey and Vermont are examples of states where residents are provided with a free yearly credit report.

Opt-Out Contact Information - If you want your name and address removed from promotional mailing lists obtained from the main consumer credit reporting agencies — TransUnion, Experian, Equifax, and Innovis — call 888-5OPTOUT (888-567-8688).

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