.
You'll know which businesses and credit grantors have requested to view your
credit report, which new accounts have been activated in your name, and whether
or not derogatory information has been added.
Checking your credit also
allows you to be alerted to information that may have negative, long-term
effects on your credit history—such as excessive inquires and possible fraud.
By checking your credit
report, you can discover possible inaccuracies in your credit history.
Correcting inaccuracies ensures that your credit report is current and correct,
which in turn helps speed the processing of your credit requests.
How does the credit
reporting system work?
The principles underlying
the Fair Credit Reporting Act (FCRA) are to ensure that this country's consumer
reporting system functions fairly, accurately and efficiently without
unwarranted intrusions into consumer privacy. These principles are even more
important, in the face of technology and computers that can provide instant
access to vast amounts of credit related information on consumers.
If you are denied credit or don’t receive what you consider a fair rate.
If you are denied credit,
the creditor is required by the Fair Credit Reporting Act to give you a notice
that tells you the specific reasons your application was rejected. You have the
right to learn the reasons if you ask within 60 days of the denial. Indefinite
and vague reasons for denial are illegal, so ask the creditor to be specific.
Acceptable reasons
under the law include:
Your income was too low
You haven’t been employed for acceptable amount of time.
You were too near your credit limits on current accounts or have too many
credit accounts.
Negative information about a past debt or current debt in default.
Unacceptable reasons
include:
You didn’t meet the
minimum standards
You didn’t receive enough points on our credit scoring system.
If you are denied credit,
the FCRA requires the creditor to give you the name, address and phone number
of the consumer reporting company that supplied the information your denial was
based on. You should contact that company within 60 days of being turned down
for credit obtain further information. Keep in mind the consumer reporting
company can tell you what’s in your report, but only the creditor can tell you
why your application was denied.
When ever you are denied
credit, ask the creditor if a credit scoring system was used, ask what
characteristics or factors were used in that system, and possible ways to
improve your credit score.
How has the computer
age affected the credit reporting process?
Where once a credit
grantor might have offered credit based on the application of a handful of
credit-related criteria, credit reporting today often applies dozens of
interrelated criteria. Although the creditor who views your credit report may
not see a paper copy of the credit file, the amount of information that he
knows about you is almost limitless.
What are the laws governing credit bureaus?
Congress passed the Fair
Credit Reporting Act (FCRA) in 1972 to curb the abuses of the credit reporting
bureaus. The FCRA is the governing federal law on the issue of credit
reporting. The Fair Credit Reporting Act helps consumers promote and use their
right to make changes to credit reports. It is a requirement, under section
1681e, that:
(b) Whenever a consumer
reporting agency prepares a consumer report, it shall follow reasonable
procedures to assure maximum possible accuracy of the information concerning the
individual about whom the report relates.
Further, the FCRA
provides a procedure in case of disputed accuracy, under section 1681 i whereby
a consumer can demand that an investigation be made into the completeness or
accuracy of any information in a credit report. If the status of the
information cannot be determined, the data must be removed or corrected. The
FCRA states:
(a) If the completeness or accuracy of any item of information contained in his
file is disputed by a consumer, and such dispute is directly conveyed to the
consumer reporting agency by the consumer, the consumer reporting agency shall
within a reasonable period of time reinvestigate and record the current status
of that information unless it has reasonable grounds to believe that the dispute
by the consumer is frivolous or irrelevant. If after such reinvestigation such
information is found to be inaccurate or can no longer be verified, the
consumer reporting agency shall promptly delete such information. The presence
of contradictory information in the consumer's file does not in and of itself
constitute reasonable grounds for believing the dispute is frivolous or irrelevant.
How do errors occur
and how frequently?
Depending on the source
of your statistics, estimates of credit bureaus errors run as high 90%. The
Attorney General of New York State has estimated that credit bureau errors are
in at least one-third of all reports, the United States Congress has estimated
that errors exist in at least one half of all reports, a Consumers Union study
found errors in 40% of credit files and the Charles Givens Organization
conducted a study in which 90% of the credit reports reviewed contained errors.
You have the right under
the FCRA to remedy all file information that is irrelevant, not properly utilized, inaccurate,
incomplete, misleading or does not reflect your creditworthiness, credit
standing or credit capacity.
REMEMBER: THE PRACTICE OF CHALLENGING CREDIT DATA AND SECURING
CREDITOR-BASED TRADE LINE DELETIONS ARE WHOLLY WITHIN THE PURVIEW OF THE LAW
AND ARE THE RIGHTS OF ALL CONSUMERS.
Go
to Next Page - Your
Credit Score - What Is It
Table of Contents
Introduction
•
Credit
Bureaus–What You
Need To Know
Your
Credit
Score–What It
Is •
Credit
Reports–How To
Read Them
Traditional
Methods–Clean
It
Up •
Quick
Fixes – How
You Can
Get Faster
Results
Monitoring
Services–Are
They Worth It •
The
Future–You Can Establish New Credit
Sample
Disputer Letter •
Other
Resources & Sponsors •
Supplement
Reading •
Summary
