If you've ever applied for a charge account, a personal loan, insurance, or a job, there's a file about you. This file contains information on where you work and live, how you pay your bills, and whether you've been sued, arrested, or filed for bankruptcy. Companies that gather and sell this information are called Consumer Reporting Agencies (CRA's). The most common type of CRA is the credit bureau. The information CRA's sell about you to creditors, employers, insurers, and other businesses is called a consumer report, or in the case of credit bureaus, a credit report.
Checking Your Credit Report
Checking your credit report is the best way to gauge the risk you pose to prospective lenders such as banks, loan officers, and landlords. Getting your credit report is easy, and can be done online. The "Big Three" credit bureaus are Experian, Equifax and TransUnion; and you can get all three reports for free from AnnualCreditReport.com.
- Equifax, P.O. Box 740241, Atlanta, GA 30374-0241 (888) 766-0008.
- Experian, P.O. Box 2002, Allen, TX 75013 (888) 397 3742.
- Trans Union, P.O. Box 2000, Chester, PA 19022 (800) 916-8800.
While many lending institutions report consumer credit information to all three bureaus, some report only to one, so your credit report might differ slightly from one bureau to another. You can order your credit report from each agency individually, or order all three at once from AnnualCreditReport.com. We recommend that you check your credit report at least once every two years, and immediately prior to any significant borrowing you're anticipating.
You can request one free report from each bureau per year. Beyond that, it will cost you a little bit of money. However, you can also request a free report if a company takes adverse action against you, such as denying your application for credit, insurance or employment, and you request your report within 60 days of receiving the notice of the action. The notice will give you the name, address, and phone number of the credit bureau to contact. In addition, you're entitled to one free report a year if you can prove that you're unemployed and plan to look for a job within 60 days, or if you're on welfare, or if your report is inaccurate because of fraud.
What's In Your Report
Here is what you will find on your report:
- Identifying information: your name, current and previous addresses, Social Security number, year of birth, employment history and income, and home ownership.
- Credit information: information for each account you hold, such as date opened, credit limit or loan amount, balance, monthly payment and recent payment history. This information is gathered from a large number of sources, including banks, credit unions, credit card issuers, mortgage and loan companies, landlords, insurance companies, professional service organizations, and others.
- Public record information: information from government agencies, including federal district bankruptcy records, state and county court records,tax liens, monetary judgments, and (in some states) overdue child support, for the last 7 years (sometimes 10 for bankruptcies).
- Inquiries: the names of anyone who has requested a copy of your credit report within the past year (or the past two years for employment-related inquiries).
Your credit report doesn't include information about your race, religion, medical history, personal lifestyle, political party, or criminal record.
Another important feature of a credit report is a credit risk score. This information is sometimes provided to a credit grantor, but it usually won't be included in the copy of your report that you receive. A credit risk score is an quantitative evaluation of a person's creditworthiness based on an analysis of that person's credit report. The calculation is based on a complex weighting of many factors, including payment history, outstanding debt, credit history, pursuit of new credit, and types of credit in use. Although different credit scoring systems exist, the most common is the Fair Isaac (FICO) score. Credit scores range from 375 to 900, with 650 being about average. A higher score indicates better creditworthiness. As your credit history changes, your credit score will change.
In addition to the standard credit reports, there are also specific-purpose reports for certain circumstances. The two most common are the mortgage report and the employment report. Both are similar to standard credit reports but focus on certain areas relevant to mortgages or employment while ignoring others.