Common Credit Scoring Questions and Answers

Q: Why did the credit reporting agencies’ turn down my request for credit?
A: Credit reporting agencies’ do not recommend that your credit application be accepted or rejected. Credit grantors make that decision based on your payment record and their own criteria.

Q: Do credit reporting agencies’ rate my accounts?
A: No. All they do is maintain records. Each creditor reports the status of your account according to your manner of payment.

Q: What is in my credit file that keeps me from obtaining credit?
A: We do not know, since credit reporting agencies do not grant credit. Each credit grantor has established criteria for making credit decisions. Your credit may appear to be perfect, but having too much credit or too many outstanding balances are examples of why your request for credit might be declined. Sometimes the decision is not even based directly on the credit file; for instance, you may not have been at your current residence or in your present job long enough. If you have any questions about why you were not approved for credit, contact the credit grantor who turned you down for credit for an explanation.

Q: Why is my last reported employment outdated?
A: What is listed as your last employment is actually the last employment reported to credit bureaus by credit grantors. Employment information is typically reported from applications for credit and therefore is not regularly updated. This information is not used by credit grantors or employers in making their decision, but is used for demographic purposes.

Q: What is a credit score?
A: A credit score is a composite that indicates how likely you are to pay on a loan or credit card as agreed. It is a predictor of future performance. It is one piece of information credit grantors use when evaluating your application for credit. Your credit score may be based solely on information in your credit file with the credit reporting agencies. Other scores may be based on a combination of credit information and other information you supply on your credit application. The way you have handled credit in the past may have a link as to how you will manage credit in the future. Credit scores cannot predict with certainty how you or anyone will manage credit. They do provide an objective estimate of how likely you are to repay on time and according to terms.

Q: Is the credit score part of my credit file?
A: The credit score is not part of your credit file. It is a process that assists the credit grantor during the credit application process. The score may change as your credit information changes.

Q: Are “credit reporting agencies” a part of government?
A: No. Credit reporting companies are just that-companies. They are in business to make money, just like the mega-billion-dollar banks that run the credit businesses. The credit reporting business is a multi-billion dollar industry. They generate their income by selling credit reports to creditors.

Q: Is it illegal or immoral to have your credit profile improved?
A: No. It is not illegal or immoral to eliminate mistakes on your credit reports. In fact, the Federal Government, under the Fair Credit Reporting Act, Section 1681e, protects your right to do so.

Q: How does the credit reporting system work?
A: Today, the credit reporting system is literally millions of computer files about individual consumers, which are maintained by the three credit reporting agencies. The files contain personal information about you-how much you owe, how you have paid your debts, your employer, your social security number, public records, etc.

Q: How does information about me get into my credit report?
A: The banks, retail stores, utility companies, etc. report your payment record to the credit reporting companies each month. The credit reporting companies then give that information to a second tier of regional reporting companies who sell it to retailers and banks or anyone who legitimately requests information about you.

Q: Why should I care what is in my credit file?
A: You’d better care. It is your credit report that creditors use to determine if they will extend credit to you. If you have inaccurate information on you report, you may be turned down for the loan you need or pay unnecessarily high interest rates.

Q: Why do the credit reporting agencies have separate reports for husband and wife?
A: The credit reporting agencies collect information based on individual social security numbers. Only by checking both the wife’s and husband’s credit reports can we ensure accuracy.

Q: Who can request information about my credit file?
A: Under the Fair Credit Reporting Act, a credit reporting company may only disclose you credit report if someone is:

a. Granting credit, reviewing your account, or collecting on your account.
b. Reviewing you for employment purposes.
c. Reviewing your application for insurance.
d. Reviewing you eligibility for a license or government-related benefits.
e. Providing information for a business transaction, such as renting an apartment.
f. A court order.
g. An IRS subpoena.
h. Someone to whom you have given written permission.

Q: How often are mistakes entered into my credit file?
A: Frequently! Some experts say a significant number of credit reports contain errors! These are inaccurate, erroneous, or obsolete information that can cost you the credit you deserve.

Q: Who will remove items from my credit report?
A: Only the credit reporting agencies have the power to remove items from your credit report. But, as required by law, the credit reporting agencies must correct or remove inaccurate, erroneous, or obsolete information.

Q: How can I add positive data to my credit report?
A: Since the Fair Credit Reporting Act does not require creditors to report information about you, many do not. That means positive information may not be reported. As long as the positive information is verified, it can be added to your credit report.

Q: How long does the restoration process take?
A: It may take 1-3 months due to the FCRA requirements.

Q: Are credit reports all the same?
A: No. Each of the three credit reporting agencies’ reports looks different and may not contain the same information. The companies maintain their own databases and do not often share information.

Q: Do the credit reporting agencies own the information on your credit report?
A: No. But, you do not own the information either. It is owned by the individual merchant or creditor who put it there.

Q: Does paying a past due debt remove the debt from your credit report?
A: Paying an old debt does not erase the fact that at one time you were not paying it as you agreed, but it is possible to update your payment history.

Q: How will I know the results following the credit reporting agencies review of my file?
A: You will be the first to know because the credit reporting agencies will write directly to you. 

Q: Once a Credit Reporting Agency has removed an item from a customer’s credit report, can it be reinserted?
A: Credit reporting agencies are often reinserting items that they have previously removed from a consumer’s credit report. According to the FCRA, one of the requirements for reinsertion of items is that a consumer must be notified within five days when an item is reinserted.

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