What Does Your Credit Score Mean?

If you know your credit score but don't know what the number means, there are several resources available to help you understand your credit score and how it impacts your financial health. Here are some steps you can take:

1. Understand what a credit score is: A credit score is a three-digit number that represents your creditworthiness, or the likelihood that you will pay your bills on time. It is calculated based on the information in your credit report.

2. Learn about credit score ranges: Credit scores typically range from 300 to 850, with higher scores indicating better creditworthiness. Different lenders may have different criteria for what they consider a "good" credit score, but generally, a score above 700 is considered good.

3. Understand how your credit score is calculated: Credit scores are calculated based on several factors, including payment history, amounts owed, length of credit history, new credit, and credit mix.Understanding these factors can help you identify areas where you can improve your credit score.

4. Check your credit report: Your credit report contains the information that is used to calculate your credit score. You can request a free copy of your credit report from https://www.annualcreditreport.com Reviewing your credit report can help you identify errors or inaccuracies that may be impacting your credit score.

5. Take steps to improve your credit score: If your credit score is lower than you would like, there are several steps you can take to improve it. These include paying your bills on time, paying down debt, and avoiding opening too many new credit accounts at once.

Credit Score Range

Credit scores typically range from 300 to 850, and different credit score ranges can indicate different levels of creditworthiness. Here are the most common credit score ranges and what they mean:

1. Poor: A credit score below 580 is generally considered poor and may make it difficult to qualify for credit or loans.

2. Fair: A credit score between 580 and 669 is considered fair and may qualify you for some credit or loans, but at higher interest rates.

3. Good: A credit score between 670 and 739 is considered good and may qualify you for credit or loans at competitive interest rates.

4. Very Good: A credit score between 740 and 799 is considered very good and may qualify you for credit or loans at even more competitive interest rates.

5. Exceptional: A credit score above 800 is considered exceptional and may qualify you for the best interest rates and terms on credit or loans.

It's important to note that different lenders may have different criteria for what they consider a "good" credit score, and credit score ranges can vary based on the scoring model used to evaluate them. However, understanding these credit score ranges can help you gauge your credit health and take steps to improve your credit score over time.

How Often Do Credit Scores Update?

Credit scores typically update at least once a month, but the frequency could vary depending on your lenders and unique financial situation. Lenders usually report updated information every 30-45 days, so it's possible you might receive an updated credit score each month.

However, every lender has its own reporting schedule and policies, so there is no set date each month when you can expect your credit scores to be updated. The information in your credit reports must update first before your credit scores can update.

The frequency of credit score updates depends on how many active credit accounts you have and when each of those lenders reports new information

It's important to note that each credit monitoring service may update at different times, and not all lenders report to all three credit reporting agencies, which is one reason why you may see some variations in your credit scores.

Several factors can affect credit scores, including:

1. Payment history: Payment history is the most significant factor that affects credit scores, accounting for 35% of the total score. It considers whether you have paid your bills on time for each account on your credit report, including credit cards, loans, and other debts.

2. Amounts owed: The total amount you owe on your credit accounts and the percentage of your available credit that you are using also affect your credit score. This factor makes up 30% of your credit score.

3. Length of credit history: The length of time you have had credit accounts is another factor that affects your credit score, accounting for 15% of the total score. The longer your credit history, the better your score.

4. New credit: Opening new credit accounts can also affect your credit score, making up 10% of the total score.

5. Applying for multiple credit accounts in a short period can negatively impact your score.

6. Credit mix: The types of credit accounts you have, such as credit cards, loans, and mortgages, also affect your credit score. This factor makes up 10% of the total score. Having a mix of credit accounts can positively impact your score.

It's important to note that different credit-scoring models may weigh these factors differently, and lenders may also consider other factors when evaluating your creditworthiness. However, understanding these factors can help you manage your credit accounts and improve your credit score over time.

Ultimately, it's a good idea to check your credit reports regularly for accuracy and monitor your credit score to ensure that you are aware of any changes.

You can check your credit report for free once a week at: https://www.annualcreditreport.com

This site provides your full report from Experian, Equifax, and TransUnion.

Credit Bureaus Unveiled: The Power, Consolidation, and Consumer Struggles from 1970 to Today

In the labyrinthine annals of consumer reporting agencies, known colloquially as credit bureaus, the period spanning from 1970 to the present is a saga marked by intrigue, transformation, and the relentless march of capitalism. Let us dissect the history and evolution of these institutions with the scrutiny they so richly deserve.

The 1970s heralded a pivotal moment in the saga of credit bureaus. The dawn of this tumultuous decade bore witness to the enactment of the Fair Credit Reporting Act (FCRA) in 1970, a piece of legislation ostensibly designed to tame the unruly excesses of these shadowy data behemoths. As noble as its intentions may have been, the FCRA merely provided a veneer of respectability to an industry steeped in opacity.

With the FCRA came a semblance of consumer protection. Agencies were obliged to furnish individuals with the contents of their credit reports, and the onus was placed on creditors to report accurate information. Yet, as any keen observer of human nature might anticipate, the appetite for profit found innovative ways to circumvent these constraints. See e.g., “Key Dimensions and Processes in the U.S. Credit Reporting System: A review of how the nation’s largest credit bureaus manage consumer data,” Consumer Financial Protection Bureau (2012).

Throughout the following decades, the credit reporting landscape witnessed a complex dance of consolidation and acquisition. The likes of Trans Union, Equifax, and Experian, national consumer reporting agencies with insatiable appetites for market dominance, began swallowing smaller agencies whole.

The 1980s bore witness to a frenzy of mergers and acquisitions. Smaller credit bureaus, often regional or specialized in their focus, fell prey to the voracious appetite of the industry giants. This consolidation not only expanded the portfolios of the big three but also concentrated power in their hands, further obscuring the transparency that consumers so desperately needed.

As the 1990s dawned, the big three stood unassailable. Their consolidation of power and data was nothing short of Orwellian, as they amassed dossiers on millions, if not billions, of individuals, their solvency distilled into a numerical metric. Privacy became a quaint relic of a bygone era, as the collection and dissemination of personal financial data became an industry unto itself.

Fast forward to the present day, and the credit bureaus, the unseen puppeteers of financial destinies, have not lost their insatiable appetite for data or dominance. They remain entrenched in the digital age, orchestrating the fates of millions with every transaction, missed payment, and misguided investment.

However, the digital age has also given rise to nascent movements advocating for consumer empowerment. The right to challenge inaccuracies in one's credit report has gained some traction, thanks in part to technology. Furthermore, initiatives have emerged to educate consumers about the importance of financial literacy and the perils of debt. See e.g., “Annual report of credit and consumer reporting complaints: An analysis of complaint responses by Equifax, Experian, and Trans Union,” Consumer Financial Protection Bureau (2023).

I must implore you, dear reader, to remain vigilant in this ongoing narrative. The credit bureaus may have evolved, but their essence remains fundamentally unchanged—an unchecked power, shrouded in secrecy, that wields disproportionate influence over the lives of ordinary citizens.

In conclusion, the history of consumer reporting agencies in the United States from 1970 to the present is a tale of power, profit, and a perpetual struggle for transparency and fairness. As we navigate the treacherous waters of the credit industry, let us heed the lessons of history and demand a future where the balance of power tilts toward the individual, not the corporate behemoths that have long held sway over our financial destinies.

A Quick Guide on Disputing Inaccurate Information on Your Credit File

As an attorney with years of experience, I understand the importance of maintaining accurate credit information. In this guide, I'll walk you through the steps to dispute any inaccuracies you may find on your credit file. It's crucial for your financial well-being to ensure that your credit report is as precise as possible. Let's get started!

**Step 1: Review Your Credit Report**

The first step in this process is obtaining a copy of your credit report. You're entitled to one free report annually from each of the three major consumer reporting agencies: Equifax, Experian, and TransUnion. Just so you know, for public records, obtain your report from LexisNexis.

**Step 2: Identify Inaccuracies**

With your credit report in hand, carefully go through it. Look for any discrepancies, such as incorrect account balances, late payments, or accounts that you don't recognize. Make a note of each item that needs correction.

**Step 3: Gather Supporting Documents**

Having supporting evidence is crucial in the dispute process. Gather any relevant documents that prove the information is inaccurate. This might include receipts, letters, or other paperwork that strengthens your case.

**Step 4: Contact the Consumer Reporting Agencies**

Contact the consumer reporting agencies that issued the report with inaccurate information. You can do this online, by mail, or over the phone. However, we recommend you send your disputes by mail, if possible. Clearly state the errors and provide them with the supporting documents you've gathered.

**Step 5: Dispute with the Creditor**

Simultaneously, contact the creditor associated with the inaccurate information. Explain the situation and provide them with the supporting documents you sent to the consumer reporting agencies.

**Step 6: Keep Records**

It's essential for you to document all communications. Note the date, time, and the names of the individuals you spoke with. This information can be invaluable if the dispute process takes longer than expected.

**Step 7: Be Patient and Persistent**

Resolving credit report inaccuracies can be a time-consuming process. Stay patient and, if necessary, follow up with both the consumer reporting agencies and the creditor.

Conclusion:

Remember, it's your right to have accurate credit information. Stay vigilant and keep track of your progress. If you're in a situation where you need more advice, please don't hesitate to consult a legal professional. If you have any questions, feel free to reach out. Thank you for reading!

Credit Bureaus, Tenant Screening, Background Checks, and Other Reports

Credit and consumer reporting is one of today's most active areas of consumer litigation, involving individual and class cases against the national consumer reporting agencies aka the “Big Three credit bureaus” (Trans Union, Equifax and Experian), tenant screening agencies, background check companies, and furnishers and users of consumer reports. Credit and consumer report errors can cause significant injury to a consumer's access to credit, employment, residential rentals, and insurance.

Credit and consumer reporting is governed by federal law - the Fair Credit Reporting Act (FCRA).

Credit Reporting: Compliance Condition Code

What is the Compliance Condition Code (CCC)?

The is reported in a Metro 2 data field which allows furnishers to report a condition that is required for legal compliance. CCCs are used to reflect accounts closed at consumer’s request, and consumer disputes under the Fair Credit Billing Act (FCBA), the Fair Debt Collection Practices Act (FDCPA), or the direct dispute provisions of the Fair Credit Reporting Act (FCRA) .

According to the Consumer Data Industry Association (CDIA), which publishes yearly written reporting procedures on behalf of the national consumer reporting agencies (Trans Union, Equifax and Experian) to be followed by their data furnishers, CCCs should not be reported in response to a consumer dispute investigation request the data furnisher receives directly from the consumer reporting agencies, unless the data furnisher uses a CCC to satisfy its FDCPA obligation to communicate that a debt is disputed.

When the CCC is used to report that some information about the account is or was in dispute, this “dispute flag” should, in principle, be removed or changed to indicate the investigation is complete. In practice, furnishers and consumer reporting agencies often fail to remove this dispute flag from the CCC field after a consumer’s dispute has been resolved. As a result, the dispute flag often remains on the account long after the consumer’s dispute. Moreover, the dispute flag provides essentially no detail on the content of the dispute, including whether the dispute was initially lodged with the furnisher or the consumer reporting agency.

Disputes Ignored: Credit Repair Companies to Blame?

There have been a record breaking amount of complaints from 2020 through 2021, with more than 619,000 in 2021 alone and Rep. James Clyburn, the chairman of the House Select Subcommittee on the Coronavirus Crisis wants credit reporting agencies TransUnion, Experian, and Equifax to be investigated.

The agencies have allegedly failed to respond to consumer complaints during the pandemic and continue to have longstanding problems with consumers raising complaints about credit reporting errors.

In May, the CFPB reported that  4.1% of complaints were resolved in 2021 compared to 25% in 2019 before the pandemic.

It appears that the majority of credit report disputes have not resulted in correction or removal of errors in consumers credit reports. The subcommittee found that between 2019-2012:

• Equifax corrected 43% - 47% of disputed items.

• Experian corrected about 52% of late payment disputes or other inaccurate data.

• TransUnion corrected approximately 49% - 53% of disputed credit reports during this time.

The CARES act, paused loan payments and were supposed to report them as current, though some lenders may have incorrectly categorized them as late.

Consumers have been reporting errors on a larger scale. The CFPB estimated the combined number of dispute submissions among Equifax, Experian and TransUnion to be 8 million in 2011. The subcommittee found that in 2021 Equifax received nearly 14 million complaints alone.

The record breaking amount of complaints consist of nearly 336 million items, including names, addresses and credit accounts on their credit reports. Yet evidence by the subcommittee found that credit raters discard millions of disputes a year without investigation. At least 13.8 million were thrown out between 2018 and 2021.

Discarding disputes violates the Fair Credit Reporting Act (FCRA) if they are submitted directly by consumers to authorized representatives.

The companies defense is that disputes are discarded without investigation when they suspect a credit repair service is making the complaint. Which highlights the importance of why you should make complaints yourself, as they may also be disputing information on your report that is accurate.

The agencies have a criteria that determine which disputes may be submitted by an unauthorized third party. For instance, Equifax, tosses out mail that tends to similar language and formatting and also comes from the same zip code.

Experian takes into account for envelope and letter characteristics, this includes same/similar ink color, same/similar formatting when choosing what disputes to discard.

It was found that credit rating companies referred more than half of the disputes to data furnishers for investigations between 2019 and 2021. TransUnion referred the most.

The prevalence of credit reporting errors have been especially concerning at a time when consumers needed access to their credit to handle difficult economic circumstances brought on by the pandemic. Errors in credit reports have the potential to lower credit scores that could deny access to loans, housing, and possibly employment, among other serious consequences.

Recent reports have noted increased activity among credit repair companies which can inflate the complaint numbers. This seems to be the biggest cause of consumer complaints being thrown out. It highlights the importance of making complaints about credit reporting errors yourself rather than relying on a third party, since many credit repair companies may make illegitimate complaints or dispute information on your reports that are accurate.

The credit reporting industry is continuing to to collaborate with the CFBB and policymakers to better serve consumers and will continue to make better economic opportunity solutions.

Credit Scores are Not Controlled by the Government

There is a misconception that credit scores are controlled by the government and a meme portraying Spiderman that reads: “The people who are $30 trillion in debt are giving you a credit score” is making its rounds on the internet.

Credit scores come from the three major credit reporting agencies: Equifax, Experian, and TransUnion. Consumers have a belief that they are somehow owned, managed and controlled by the federal government but they are not, in fact.

At a fundamental level, the credit bureaus all operate as private, for-profit companies. They are highly regulated by the government by the creation of the Consumer Financial Protection Bureau or the Fair Credit Reporting Act.  But in reality, none of the businesses are mandated by the government.

Credit bureaus work to collect consumer credit information and they sell that information to businesses such as banks and credit card companies. These companies want to know the financial risk of their consumers and are willing to pay for screenings. This determines the likelihood that the consumer will successfully manage a large expense and pay back a loan.

Credit bureaus also work directly with consumers. They are tasked with responding directly to consumer disputes due to mistakes and missing information on credit reports and allow consumers access to their credit scores. If there is fraudulent activity, they allow the consumer to freeze their account or place fraud alerts.

Each company works independently from each other. That is why each report may slightly differ. You may also find that you can access different reports from different places.

Even though the credit bureaus are not apart of the government they are still subjected to laws and regulation. The FCRA has been in existence since the 1970’s. It has been implemented to protect consumer rights when it comes to accuracy, fairness, and privacy of credit information. According to the FCRA you have the right to:

• Be told if information in your credit report has been used against you

• Know what’s in your credit report

• Access your credit score

• Dispute incorrect or incomplete information

• Have incorrect or incomplete information resolved by the credit bureaus

• Have outdated, negative information withheld from your report

• Limit who can access your file

• Give consent to your report being given to employers

• Limit pre-screened credit and insurance offers sent to you

• Seek damages from violators

• Be given additional protections if you’re the victim of identity theft or are on active military duty.

Buy Now, Pay Later & Credit Score

Buy now pay later options do not generally affect peoples credit and do not yet routinely appear on most credit reports. The credit bureaus; TransUnion, Equifax, and Experian are each working through this relatively new system and how to report on these services in the context of credit worthiness and a borrowers financial obligations. 

This means that a good record of payment on your buy now, pay later accounts will not help build your credit. It also won’t hurt your credit unless your account is sent to collections. This payment option is popular with younger generations, as they are least likely to have built their credit. For now, it is a good way to practice building your credit. 

How Buy Now, Pay Later Works

When you purchase something online, some stores may offer to divide your purchase into smaller installment payments. Most often into four payments, every two weeks. The most used options are Affirm, Afterpay, Klarna, Paypal, and Zip. They partner with retailers who pay them commission. 

Approval is partially based on data that includes address stability, public records and previous history you may have with the lender and banking information. 

Opportunities for Credit Building

The credit bureaus are working hard to incorporate this method into their formulas. Consumers are using these accounts online more frequently than traditional credit cards and loans, especially young consumers. This could prove to be most beneficial to build up credit. 

There are Risks

Since buy now, pay later loans are new and unregulated they are often paid late, most often by consumers of the age group 18-30. BNPY lack the typical protections you would have under a credit card such as dispute resolutions. The easy access to the application causes the consumer to impulsively purchase and buildup debt faster than they normally would. The consumer may also rack up multiple BNPL accounts on multiple sites that could potentially lead to collection accounts. Once sent to collections, it will end up on credit reports. 

The Credit Bureaus

It has been decades since a new type of credit has been in the market. The BNPY system does not fit perfectly within the two categories they have in place now: Installment loans that span months or years and revolving credit like credit cards. 

The bureaus are working together to find a format that fits and are figuring out a common ground.

Current Plans:

• Experian has announced it plans a specialty bureau to hold buy now, pay later data. Information from the specialty bureau will be “promoted” periodically into the consumer’s core credit file.
  

• Equifax plans to add the information to regular credit reports.
  

• TransUnion has said it will partition off the data on core credit reports.

Changes in Medical Debt Reporting

The nation’s largest credit reporting agencies; Equifax, Experian, and TransUnion announced on Friday that many U.S. consumers will have their medical debt wiped from their credit reports. 

In a joint statement, they stated that nearly 70% of medical collection debt accounts from consumer credit reports would be removed after conducting months of market research. The changes will take effect July 1, 2022.

Paid medical debt will no longer be included on consumer credit reports. Credit bureaus plan to extend the timeline reporting how long a medical bill is sent to collections. Typically a medical bill is sent to collections after 180 days. Consumers will now be given up to one full year. This will give consumers more time to work with insurance and/or medical providers to address their debt before it is reported to their file without it impacting their credit score.

 Most medical debts in collection on consumer credit reports are under $500. Beginning in the first half of 2023 Experian, Equifax, and TransUnion will no longer include unpaid medical collection debt that is under $500, though that threshold may increase. 

This does not change the responsibility of the consumer to pay, but it may alleviate some of struggle consumers face when trying to apply for credit. 

Real Example of Mixed Credit File

Siblings, especially twins are more likely to have their credit files mixed than most people. One man had realized that his credit file continued to be mixed with his twin sisters file. The US credit rating agencies can’t seem to tell them apart. Sometimes they associate his social security number with her name and vice versa.  

When he applied for a job, his background check listed his name as hers; and his actual name was listed as an alias. They have both been consistently rejected for credit cards, despite both of them having good credit. Mitchell was denied a car loan by a bank that he had used for years. However, they did have luck obtaining housing. 

This is a problem that they have to worry about anytime they apply for credit. They never know what information is coming up when their file is pulled. 

The problem doesn’t lie within the banks or lenders, but the credit system. In the United States, the Big Three: Equifax, TransUnion, and Experian have the most control over our information. These companies obtain hundreds of data sources to predict your credit score. In this mass of data, mistakes happen. 

When a credit system messes up, consumers are supposed to have a recourse in fixing the problem. Each agency has a dispute process. When a consumer disputes an error, the credit bureaus are required to do an investigation. When that fails, consumers are oftentimes unsure of what to do. The next step is to file a complaint with the Consumer Financial Protection Bureau (CFPB), which will forward your complaint to the appropriate ratings agency. 

Unfortunately, these situations go in circles. The furnishes will verify your information with the creditors and the creditors will verify your information with the furnishes. In the twins situation, the male pulled his files and mailed in physical proof of his identity, such as his social security card and drivers license. After investigation, his reports still listed his sister as an alias or a former name. 

These situations are rarely heard of, but happen often. In this situation, it is likely due to their social security numbers “matching” in the system. Since they are twins, they were likely given social security numbers that are one digit off. The credit bureaus consider this a match, since they only verify 8 out of 9 digits. They also have the same last name, and likely lived in the same household growing up, giving the bureaus verification that they are the same person. 

We recommend that you check your credit reports a few times a year. This is especially important if you may have a relative with a similar name. Many people do not realize their credit has been compromised until they are denied credit. You can check your credit reports for free once a week until April of 2022 at www.annualcreditreport.com 

If you have investigations that keep failing, contact us for help. You may be entitled to a settlement. 

Free Report Weekly Until April 2022

On March 2, 2021 the three major credit bureaus, TransUnion, Equifax, and Experian in a joint statement said that they will continue to offer consumers free weekly credit reports until April 20, 2022 due to the ongoing COVID-19 pandemic. 

Prior to the pandemic, credit bureaus were required by law to provide a single free report just once a year and consumers were charged about $20 each additional time they needed one. 

Frances Creighton, president and CEO of the Consumer Data Industry Association, which represents the three credit bureaus told Consumer Reports Inc.: “None of us could have foreseen that the pandemic situation would last longer than a year.” This time is especially important for consumers to have the key to their financial information. 

Credit reports are used by lenders to determine whether you’re a good credit risk. Your credit report shows whether you made mortgage, credit card, auto loans, and/or student loan payments on-time. Employers, potential landlords, cellular service providers, and employers are able to review your report with your permission. 

Your credit score is calculated by the information in your credit report. This is the three-digit number that is meant to determine your creditworthiness. Getting a credit report on a regular basis can help consumers monitor their information because changes in the report can happen daily. 

You can obtain your credit reports at AnnualCreditReport.com. The credit reporting industry has seen an unprecedented amount of consumer complaints made to the Consumer Financial Protection Bureau over errors discovered in credit reports. Credit report errors accounted for nearly 2/3 of the total complaints in 2020, which is a rise of 23% from 2019 according to the CFPB’s complaint database. 

It was found that up to 1/4 of credit reports contain at least one mistake according to a 2012 Federal Trade Commission Report. Consumer Reports Inc. conducted a nationally representative survey of 2,223 U.S. adults in January 2021 and found that 12% of Americans who checked their credit report found an error. 

Errors include anything from incorrect address information to more serious problems, such as loans that are listed multiple times, paid-off loans that appear as still open, and/or information about someone else’s account that appear on your account. 

Last year, in another survey, participating consumers noted a range of mistakes on their reports. One man found that his mortgage was listed twice. His bank had promised to fix the error but it still remained on his report months later. Another consumer’s report had his sons information mixed with his own. One other found that an unpaid bill had went into collections in a state he had never lived in. 

These errors can negatively affect a consumers credit score and could be a particular problem for people who deferred loan payments with lenders or credit card companies. 

Last May, the Coronavirus Aid, Relief, and Economic Security Act was passed and required companies providing federally backed mortgages and student loans to offer deferrals while still reporting to the credit bureaus that the loan is current. Some credit card companies and auto lenders also offered deferrals. For some, those deferred loan payments were still being reported as late. This is another good reason to check your report often. 

There are consumers who are advocating that credit reports should be free permanently. They feel that consumers should not be charged to access their own data. Chi Chi Wu, an attorney at the National Consumer Law center, who has a focus on credit issues, said: “There’s nothing I can think of that would legally or logistically prevent the Big Three credit bureaus from making free weekly reports permanent”. 

Credit bureaus are suppose to look at all supporting documentation when a consumer files a dispute, but they very often do not. Agencies should ensure that any supporting documents a consumer submits in the automated dispute filing is considered in the bureau’s review of their case. Oftentimes the task of reviewing disputes is outsourced and the bureaus will usually accept the results of the outsourced investigation without questioning the accuracy of the findings. 

Currently, credit bureaus will only match 7 of the nine digits of a social security number in the consumes report. To avoid errors, advocates are pushing for the bureaus to require the matching of all nine digits. 

If you find an error in your report you should file a dispute with the three credit bureaus. TransUnion, Equifax, and Experian are separate companies so the disputes must be filed to each. It is best to send a letter by certified mail and keep copies for yourself. The paper trail will make it easier to confirm that the credit bureaus are following the lawful time lines. You should avoid filing disputes online because often credit bureaus have standardized forms that might force you to oversimplify your situation and never have an actual representative look at the dispute. 

Along with the letter, you should include any evidence. This could be account statements or information on payments made that will protect you from a credit bureau dismissing your claim because of lack of sufficient backup information. Avoid resubmitting a evidence later on because it could be denied if the claim is considered similar to previous ones. 

Dispute Still Denied

If your disputes get denied consider hiring an experienced lawyer to file a case. We specialize in FCRA law, your consultation is free, and your legal fees will be covered so there is no out of pocket expense. 

Personal Statement 

You are able to add a personal statement to your report to help explain your situation. Banks and other institutions will typically read and consider this note when making a decision about your creditworthiness, especially if you lost a dispute and have a negative item on your report. 

Ask to send updated report

If you won a dispute you should ask the bureaus to send out an updated report. This new report will go to anyone who has checked your report within the past six months. 

What to Know About the 3 Major Credit Bureaus

Credit reports affect your life more than most people realize. When you are leasing or buying a new home, applying for loans or credit cards, getting insurance coverage, or applying for a new job, there is likely someone using one of your credit reports to evaluate you. 

Because your credit reports carry so much of your information, the companies in charge of putting together and selling them have a major influence over your financial life. These companies are known as credit bureaus. In this blog we will look closer at what the credit bureaus do and the rules they must follow. 

The three main credit bureaus in the U.S. are Equifax, TransUnion, and Experian. They are the three largest nationwide providers of consumer credit reports to lenders, insurance providers, employers and other companies who use credit information to help predict risk. 

Credit reporting has been around for over 100 years, but it has evolved over time. Credit bureaus use to be small and localized, but overtime the “Big Three”, as the major credit bureaus are known, attained may of these smaller credit agencies and consolidated their data into larger databases. 

Presently, each of the three major credit bureaus maintains a database with information of approximately 220 million U.S. consumers. When you apply for a loan and/or credit card, it is a given that the lender will access at least one of your credit reports provided by these three companies during the application review process. 

Big data, as the credit reporting industry is often called, brings in big money. The three main credit bureaus earn billions of dollars every year selling credit information to other companies. They collect information about you and sell it to others who are willing to pay for the data.  

How They Get Your Information

You may not recall giving credit bureaus permission to create a credit file about you, and you shouldn’t. This is because that is not how the bureaus work. Many companies that you and others owe money, are willingly sharing details about their customers with the bureaus. These companies include lenders, banks, credit card issuers, collection agencies, and others. These businesses are called data furnishes. Data furnishers opt to share information with the credit bureaus for many reasons. The biggest motivator is that credit reporting give a company’s customers extra motivation to pay their debts and to pay on time. 

Most of the data in credit reports comes from data furnishers, but the credit bureaus collect information in other ways too. When it comes to public records such as bankruptcies, the credit bureaus seek out purchase information from data aggregation companies like PACER, AKA Public Access to Court Electronic Records, and LexisNexis. 

Information the Credit Bureaus Collect

The credit bureaus collect a great deal of data to include in your credit report but ignores some details about your life also. For example, your credit reports do not include criminal records, income, or bank account balances. The information that they do collect for credit reporting purposes can generally fit into one of the five categories.

Categories:

1.Personal Information

• Name (current and previous)

• Addresses (current and previous)

• Date of Birth

• Employer

• SSN

2. Collections

• Accounts sold to, or managed by third-party debt collectors

3. Public Records

• Bankruptcies

• Previously included judgements and tax liens as well

4. Credit Inquires

• Details about when your credit was accessed during the last two years.

5. Accounts 

• Credit obligations (current and previous)

• Account numbers

• Payment History

• Current Balance

• Status (current, closed, past due, charged-off, etc.)

• Credit Limit

• Date of account opening

Credit bureaus collect this information for the reason that it is profitable. Other companies are willing to pay for your credit reports. Credit reports are helpful to lenders and other companies to predict the risk of doing business with you. Scoring models, like FICO and VantageScore, can also use these details to calculate your credit score. 

Credit Bureaus Must Follow Federal and State Laws

It I can be aggravating that the credit bureaus are allowed to collect sensitive financial information without your permission. Even though these companies are allowed to gather your information and sell it to others, there are rules in place to help protect you. 

At the federal level, the credit bureaus are obligated to follow the Fair Credit Reporting Act, also known as the FCRA. The FCRA is in existence to protect consumers and regulates what consumer reporting agencies are required to do when it comes to your information. The full text of the FCRA is over 100 pages, but here are some of the key provisions of the act:

• Credit Report Accuracy: The bureaus must impose “reasonable procedures” to assure “maximum possible accuracy” of the information concerning the individual. They should only be including accurate information on your credit reports. Should you discover credit reporting errors or fraud, the FCRA allows you to dispute the information. When you submit a credit dispute, the bureau must investigate your claim. They have 30 days to respond to the dispute and to delete information that isn’t verified as accurate. 

• Free Annual Credit Reports: It is a good idea to review your credit reports frequently. An amendment from 2003 to the FCRA, known as the Fair and Accurate Credit Transactions Act or FACTA, provides free access to each of your credit reports once every year. AnnualCreditReport.com is the website you should visit to access these free reports. The three major credit bureaus are offering a free weekly credit report access at this website until April 2021 in response to the Coronavirus pandemic.

• Permissible Purpose: The credit bureaus are only allowed to sell your credit reports to certain entities such as Lenders, insurance companies, landlords, and employers (with written permission). They may have “permissible purpose” to buy a copy of your report. In good news, someone such as your ex-partner or random creepers would be out of luck.

• Freezing Your Credit Report: You have the right to freeze your credit reports as a protective measure. When a credit freeze or security freeze is in place, companies you don’t have a current relationship with cannot access your credit information. In order to grant them access to your data, you must first unfreeze your report. An amendment established in 2018 to the FCRA, known as the Economic Growth, Regulatory Relief, and Consumer Protection Act, lets your freeze and unfreeze your reports for free.

• Opting Out: The credit bureaus are able to sell your information to certain companies for marketing purposes, even if you are not applying for financing. Your credit data may have been sold without your knowledge if you have ever received a prescreened offer of credit or insurance in the mail. Use the link OptOutPrescreen.com or call 888-5-OPTOUT (888-567-8688) if you wish to stop sharing your credit information for marketing purposes

Along with the FCRA, the credit bureaus must comply with state laws as well. For example, on top of the free annual credit reports provided by the FCRA, state law might require the credit bureaus to give you more free reports. In some states, employers aren’t allowed to review your credit information as a part of the background check. 

Different Credit Bureaus Contain Different Information

When reviewing your credit reports from all three bureaus, you will likely find similar information on each report. But, there are probably some differences as well. For example, your Experian credit report might show a collection account, while that account may be missing from Equifax and TransUnion. 

There are many reasons why your credit reports could contain slightly differing information. Here are a few examples:

• The credit bureaus are competitors and they do not share data with one another.

• Credit reporting is voluntary. Just because a data furnisher opts to share information with one bureaus does not mean it has to report information to all of them. The most major lenders will report to all three credit bureaus.

• The consumer doesn’t always understand the dispute process. Someone might dispute an incorrect item with one credit bureau, but not the other two. This could results in an incorrect account being deleted form one credit report while it remains on the others.

• Dispute results can be inconsistent. Even if you dispute an inaccurate account with all three credit bureaus, the results may vary. Each bureau will conduct its own investigation. So, while a data furnisher might verify the account as accurate with one credit bureau, it could also fill to respond to the others. This might lead to a disputed account remaining on one or more of your reports, but not all of them.

• Your credit file could be mixed. Credit bureaus can make mistakes. One major mistake is combining your credit file with someone else’s file. This often occurs when people have similar names. Generally, mixed files occur with just one credit bureau at a time.

It is critical to understand how the credit bureaus work, whether you’re building credit for the first time, rebuilding damaged credit, or trying to maintain your already good credit rating. The credit bureaus are important but they do not control every aspect of your financial life. 

The credit bureaus don’t assign your credit scores. They don’t approve or deny loan applications. They don’t decide which accounts you will open or how you will manage your credit obligations. Knowing what the three credit bureaus are allowed to do and which behaviors are wrongful can protect you and help you keep your credit intact. 

Keeping Good Financial Health

The most important financial document you can have is your credit report.  It is used by lenders to determine if you qualify for a loan, insurance, renting a property, and it may even be checked when you apply for a new job. 

Information contained in your credit report is used to calculate your credit score. To maintain and/or increase your credit score, you have to check that the information that the credit bureaus are collecting are is accurate and the activity is remaining positive. 

Keeping your credit score up comes from :

• Paying bills on time

• Not opening too many credit accounts

• Keeping your credit card balance below 30% 

Even government-regulated agencies such as Transunion, Equifax, and Experian can make mistakes. The Federal Trade Commission reported that 1 in 5 people had an error in their credit report in 2012.

How does this happen?

It could be that a lender had sent the credit bureaus the inaccurate information. This includes information about your transaction history, or you could have a mixed file with someone who shares a similar name and social security number. An error could also be a sign of identity theft. 

The only person who is keeping tabs on your credit report for accuracy is you. We recommend that you check your credit report at least once a year. You are allowed to request an annual free credit report at annualcreditreport.com. Since the Covid pandemic consumers are able to view their credit report once a week for free. Everyone should take advantage of this service, especially at this time where finances are are difficult. 

Lenders are not required to report to every company, so the information you find on a Transunion may report differently than on Experian and Equifax.  

The specific details in each credit report may be different, but they all follow a similar structure. It is important to check the personal information of your credit report carefully:

• Current and former names

• Current and former addresses

• Birthdate

• Social security number

• Phone numbers

• Spouse or co-applicants

• Current and former employers

Errors in this section could indicate a mixed file or a stolen identity. If you find an error it is important to dispute the wrong information immediately.

Your credit report contains a section for “Soft” and “Hard” inquiries. Soft inquires are requests made by outside parties, such as lenders who want to offer you unsolicited credit. They request your information to see your credit worthiness. These do not affect your score. Hard inquiries will affect your score. These are made by lenders when you apply for credit, employment, insurance, etc. You have to authorize the hard inquiry when you apply.

If you have debt related mistakes, it is important to contact the lender first and clearly explain the error that was made. They will likely fix the error without protest, especially if you have been a good customer. They are required to alert the bureaus of the mistake, but you should also file a dispute to the bureaus to make sure the communication was successful. 

When communicating with the credit bureaus about an error in your report, it is important to collect any and all documentation that supports your claim. This could be bank statements, bills, contracts, legal documents, and emails. An effective way to dispute is to write a letter to the bureau as opposed to disputing online, so that a real person must look over your information. In the letter you should clearly outline the error(s) and explain the steps you have already taken to fix it. When finished, send the letter along with copies of your documents to the bureaus using certified mail. It is important to keep track of all communication. 

If you need help with anything related to your credit report, use our contact form to send us an inquiry. We will get back to you within 24 hours!