My Free Credit Report

Credit Bureaus or Consumer Reporting agencies are companies that gather information about your payment history on your obligations.

These credit bureaus are in the business of gathering this information and then SELLING it to future creditors, employers, insurers and any others who have a legal reason for requesting your information.

It is important to understand how credit reports and credit scores work.

Three Major Credit Bureaus:

Equifax, Experian and TransUnion are the three major reporting agencies.

They gather information from one source and give it to another. They do not determine what information that is or what it should be.

Sometimes there is confusion on what information they can and cannot report.

What Goes Into Your Credit File

PERSONAL INFORMATION

The personal information that goes into your report will be your full name, aliases or nicknames, current and previous addresses, your telephone number, your Social Security number and any variations of that number used.

Your date of birth is included and previous and current employers.

No information on health or medical treatments, race gender, ethnicity, political or religious preference should be reported.

Credit Information / What is Reported

Sometimes referred to as ‘Tradelines’

This will show your individual accounts that you have opened or has had activity within seven years. The creditor’s account number, current status and whether your account has been delinquent.

Delinquency is reported in 30 day intervals.

Charge Off means that the payments have been delinquent by 180 days for an open end retail account (credit card:charge or unsecured) or 120 days for a closed end retail account (personal car or equity loan).

A charge off means you still owe money and the company will try to collect it, but the account is no longer part of their active accounts receivable. This most likely has a negative affect on your credit rating.

Other information reported will include the account opening date, the type of account, the credit limit and if it is a joint account or in your name only.

Public Records / Consumer Statements / Inquiries

PUBLIC RECORDS:

The public records section does not show good news. This section includes tax liens, judgments, overdue court ordered child support and bankruptcy.

CONSUMER STATEMENTS:

Consumers are allowed to place up to a 100 word statement on their credit file. This is most used when a consumer disputes information contain in their credit file. If the creditor and the credit reporting agency does not agree with the consumer and do not remove the negative information, the consumer has the option of placing a statement in their file disagreeing with their findings.

** Be careful when using this option. Do not mistakenly put personal information that every creditor will have access to. Writing a letter may be a better option when applying for a loan.

INQUIRIES:

Inquiries are requests by others to review your credit report. There are two types: inquiries inquiries initiated by you and those for other purposes..such as pre-approved credit offers, employment or account review.

How Long Information Is Reported

Bankruptcy – Chapter 7:10 years from filing

Civil Judgments:7 years from filing

Tax Liens:15 years for unpaid / 7 years from date paid

Credit Information (Tradelines):7 years from date of last activity

Consumer Statements:2 years minimum

Inquiries:1 year for credit transactions, 2 years for employment

Credit Scores

There is NO single credit score formula. A credit score is the process of assigning a number value in order to rate your level of credit risk.

How The FICO Score Became About:

Bill Fair and Earl Isaac thought they could come up with people’s credit risk by guessing how likely they would repay a new loan on time. Banks laughed at them at first, but started to have success with their product and the rest is history.

The credit bureaus now have rented space on the computer of Fair Isaac and can produce a credit score upon request. Funny thing is, the banks do not even know what goes into creating a credit score. This is considered a trade secret.

Fair Issac has created separate products for each credit bureau or financial institution and uses a unique formula, so you could end up with different scores from each credit bureau.

Do not obsess about a number, especially since now you know there really is not a correct one. Instead, focus on the information contained in your report.

Free Credit Reports

It is important to Monitor Your Report

You need to know what is being reported and whether that information is correct. Under the Fair and Accurate Credit Transactions Act, you are entitled to receive a free report each year from the three major credit reporting agencies.

This will also help stop identity theft which is the fastest growing crime and fraud,victimizing over 10 million people a year and costing billions of dollars.

Did you know that stolen identities are used up to 30 times, with most victims only discovering the theft after they have been turned down for a loan or contacted by a collection agency. You may already be a victim, many times over, and not even know it

You need to take steps to protect your information and an annual review of your credit report file is a good habit to get into.

It can be frightening being faced with a legal suit from collections agency. It is important that you do not allow a default judgment to be entered against you. Your best option is to go to court and dispute the judgment, or to settle out of court to avoid the record of the law suit on your credit report.

There is a lengthy statute of limitations with any judgment filed against you. Normally the statute of limitations on judgments ranges from twelve to twenty years. It is becoming more common for collection agencies to initiate lawsuits in collection cases because the judgments are renewable. After the collections agency initiates a judgment, that judgment may be renewed prior to the expiration of the original judgment. This can be bad news for the debtor, as theoretically a judgment could remain against the debtor indefinitely.

Another fact to be aware of is that when you pay off a collections judgment that has been initiated against you, your credit record will show a “satisfied judgment” mark for seven years from the date that you paid the judgment. Anyone checking your credit will know that you have suffered a judgment against you. For this reason it is important that you avoid any legal collection suits whenever possible.

Should you already have a judgment showing on your credit report, there are actually strategies that you can use to have them removed from your record. Consumers are actually protected by many state and federal laws regarding their credit. You do have the right to dispute your credit reporting’s with the credit reporting bureaus. You may also negotiate with your creditor and request that they note your account as “pay for delete” rather than “satisfied judgment”. This is a much better option than having your credit report state that there was a judgment against you. When negotiating with your creditor should you decide to use this technique, be certain that you have a written agreement stating that the creditor agrees to this, as otherwise your creditor may choose not to follow through with your agreement.

Many consumers are not aware that a collection mark is allowed to remain on your credit report for 7 years. The seven year period that a negative collection mark remains on your credit report actually begins at the date of your first missed payment. This can be very damaging to your credit and make getting loans, credit cards jobs or mortgages very difficult.

There are some very important facts that you should be aware of before you pay off any account that is in collections. If you plan to pay off a collection it is a very good idea to negotiate with your collection agency first. There are a couple very important items that you will want to work out with your collections agency when you intend to pay them off.

The first item that you will want to negotiate with a collection agency is paying a lower amount. Oftentimes the collection agency will agree to a lesser amount to be able to collect on, and close your account. This fact alone can save you hundreds of dollars. The next item that you will want to negotiate with your collections agency, as well as the most important item that you need to negotiate, is that the collection agency agree to remove the collection from your credit report. You will want to get this agreement in writing prior to submitting your payment to the collection agency, otherwise they may fail to follow through with your agreement.

In the event that you have paid off a collection account which continues to appear on your credit report, you will need to file a dispute with the credit bureau. The reason for this is that an account that has gone through a collection agency, will be noted on your credit report as a ‘Paid collection’, even after you have paid the account off. To lenders this is considered a negative account and is very damaging to your credit score. It is important for you to have the credit bureau remove this account from your credit report.

The key to having this information removed from your credit report, is to remember that the burden of proof lies on the credit bureau. The credit bureau is required by law to prove that the negative information they placed in your credit report is correct. You may dispute the negative collections information on your credit report by requesting that the credit bureau provide you with documentation that the account actually belongs on your credit report. When writing your dispute, you will want to request that if the credit bureau is unable to provide proof of the negative information that they placed in your credit file, that the negative information be removed from your your credit report. Once you initiate your dispute, the credit agencies will have thirty days to investigate your claim. Rest assured that most of the time the collection agencies are unable to verify the negative information and are then required to remove it from your credit.