Q:
What is a credit report?
A:
Whenever you apply for any type of credit or financing,
a credit report is pulled from at least one of the
three major credit bureaus. While there are hundreds
of smaller credit bureaus around the country, virtually
every credit bureau is affiliated with either Experian,
Trans Union, or Equifax.
These credit bureaus collect and maintain information
on the vast majority of Americans, but they are
not affiliated with the government in any way. The
credit bureaus are for-profit corporations and they
sell your personal information for money.
The credit bureaus receive your personal information
through the same lenders who grant you credit. They
have agreements with each of these credit grantors
that require the credit grantor to inform the credit
bureaus of everything that occurs in your relationship
with the credit grantor. If you make a payment late,
the negative credit listing is quickly reported
to at least one of the three major credit bureaus
and is added to your credit history. Credit reports
are not just a record of how you are currently managing
your credit accounts. Credit reports are histories
of everything you are doing with your credit now,
and everything you have done in the past.
The credit bureaus collect this information, list
it on your credit report, then sell it to other
credit grantors who wish to see your credit history
before they decide to lend you money. The credit
grantors who review your credit are especially interested
in any negative credit. If you have shown any tendency
to pay late, or to disregard your financial commitments
in the past, then the creditors' computers will
immediately reject your application.
Just like when you were in high school, your
credit report is your financial report card to the
world.
Q:
What kind of information appears on the report?
A:
Merchant Trade Lines
These include all regular credit lines such as department
store cards, auto loans, mortgages, and credit cards.
If there is any history of late payment, or if the
trade line was included in bankruptcy, charged off,
or put into repossession, the listing will be considered
negative by all credit grantors.
Collection Accounts
When an account is referred to collections because
of delinquency or because of a bad check, this appears
on the credit report as a collection account. Collection
accounts can appear as paid or unpaid accounts.
Any type of collection account, whether paid or
not, is considered very negative by all credit grantors.
Court Records
Court records include bankruptcies, judgments, liens,
divorce, satisfied judgments, and satisfied liens.
All court records, including satisfactions, are
considered negative by all credit grantors.
Inquiries
Every time a potential credit grantor looks at your
credit file, a credit inquiry appears on at least
one of your credit bureau reports. If the numbers
of inquiries are few over the last two years, then
there may be no negative effect on your credit worthiness.
However, if there are many recent inquiries showing
on your credit report, credit grantors may become
nervous and deny you credit.
Q:
How long do negative items stay listed?
A:
The Fair Credit Reporting Act (FCRA) requires that
most negative credit items be deleted from your
credit bureau file in no more than seven years,
except for bankruptcy, which can be reported for
up to ten years. These are the time limits for reporting
negative credit. The creditor or the credit bureau
can choose to have the negative credit information
deleted whenever they please. Inquiries may remain
on the credit report for up to two years.
Q:
Can I see my credit report?
A:
Most credit grantors are not allowed by the credit
bureaus to show you your own credit report. But
you can purchase your credit report from the credit
bureau for a fee. Once you receive your credit report,
you may find that you cannot read it because the
information is listed in an unfamiliar code. Trans
Union and Equifax credit reports are very difficult
to interpret and understand. Experian credit reports,
however, are relatively easy for most people to
read.
Q: How much bad credit does
it take to be denied credit?
A: As you may have already
experienced, even one small late pay listing may
result in credit denials. It is a myth that a large
amount of positive credit can outweigh some negative
credit. Any negative credit what so ever can become
a substantial credit obstacle.
Q: Who looks at my credit
report?
A: With the passing of
each year, your credit report is used more and more
often as a yard stick to measure your character.
Prospective creditors will always review at least
one of your credit reports before granting you credit.
Today it is increasingly common for insurance companies
to review your credit before extending auto or health
insurance. Many employers now check credit before
they consider you for a position. If you rent, you
may have already been through a credit check to
determine your worthiness as a renter.
Q: Should a consumer try credit
repair on their own?
A: Disputing the credit report
is easy. Getting results from the credit bureaus
is amazingly difficult, complex, and infuriating.
It is not a coincidence that the Federal Trade Commission
receives more complaints against credit bureaus
than any other type of business. Remember, the credit
bureaus are primarily interested in protecting their
profits. Investigating your challenge consumes these
profits. Short of sparking a mass number of lawsuits,
the credit bureaus seem to do everything in their
power to discourage consumers from making progress
in their restoration efforts. Restoring your own
credit is like repairing your own transmission or
representing yourself in court; it is possible,
but you must decide if your are willing to take
the time and assume the risks of doing it yourself.
Q: Does bankruptcy wipe the
slate clean for a second chance?
A: Many bankruptcy attorneys
do not adequately understand or explain the effects
of bankruptcy to their clients. Stated simply, bankruptcy
is to the credit rating what the nuclear bomb is
to war. When you file for bankruptcy, every credit
account that you decide to include in bankruptcy
will become an "included in bankruptcy"
account. Additionally, a bankruptcy filing and bankruptcy
discharge listing will appear in the court records
section of your credit report. Because so many negative
items are attached to the bankruptcy, it becomes
very difficult to remove all trace of the bad credit.
If at all possible, you should avoid bankruptcy.
Q: Are items such as bankruptcies
and foreclosures impossible to remove?
A: There is not one type
of negative listing that cannot be removed from
a credit report. While negative items such as bankruptcy
or unpaid debts are certainly more difficult to
remove from the credit report, this has more to
do with the operational systems of the credit bureaus
than with the severity of the bad credit item. For
example, judgments and tax liens are severely negative
listings yet are considerably easier to remove.
CALL
Toll Free: 1-877-575-CREDIT
NEXT:
Read the Agreement
