Whenever you apply for a credit card, loan, insurance or even a job, the prospective lender or employer will access a personal file maintained by one or all of the three credit reporting agencies--Experian, Equifax and TransUnion. These agencies, or CRAs, collect exhaustive information about not only your ability to handle debt but other information as well, such as if you have ever been sued or arrested or have filed for bankruptcy.
Information Maintained by CRAs
Credit reporting agencies compile specific types of information in the consumer's credit reports. A credit report can reflect numerous types of records, such as debts that were charged off or handed over to a collections agency or those on which the consumer made late payments. Also included in the report is information regarding foreclosure, tax liens, repossessions, bankruptcy, court judgments and even records of credit and loan applications (regardless if they are accepted or denied). Each of these records is reflected on the credit reports maintained by the three CRAs for a designated period of time. Records of most types of debts stay on the credit report for seven years, although bankruptcy records remain for 10 years. Other records, such as tax liens, can endure indefinitely.
Credit Scoring
The Fair Isaac Corporation and Consumer Federation of America state that credit reporting agencies have different methods of calculating credit scores. Each agency employs a different score range. Equifax uses scoring range between 300 and 850, Experian between 330 and 830 and TransUnion between 150 and 934. Credit reporting agencies take various factors into consideration when calculating credit scores. Theses include the consumer's payment history, the amount owed on all accounts, how long the consumer has been using credit, how many times the consumer has applied for credit and if the consumer has a good mix of debt types (such as installment loans and credit card debts). A credit score of 700 or more indicates a good credit history, while one of below 600 indicates that a credit report requires significant improvement.
Fair Credit Reporting Act
Under the Fair Credit Reporting Act, consumers are authorized to know what information has been compiled by credit reporting agencies. This act also ensures that all information in the reports must be accurate. Additionally, if consumers are denied a loan or employment, they have the right to know the name of the CRA that supplied the report. In response to federal legislation, Congress established an online website, AnnualCreditReport.Com, where consumers can access credit reports from all three CRAs free of charge once a year and more frequently if a company has taken adverse action (see Resources). Consumers may opt to purchase their credit scores on this site or through each individual CRA for a small fee.
Disputing Inaccurate Information
The Fair Credit Reporting Act authorizes consumers to dispute any inaccurate information they notice in their credit reports. The Federal Trade Commission advises consumers who wish to file a dispute to do so in writing and send the correspondence by certified mail (return receipt requested). In most cases, the consumer reporting agency will investigate the dispute and respond to the consumer within 30 days. If an error is removed, the consumer will receive a copy of the revised credit report. However, it's important to note that by law, negative reports that are accurate and timely must remain on the consumer's credit report until the records expire. CRAs are not required to investigate frivolous disputes. For more information on how to construct a dispute, see the Resources link below.
CRA Contact Information
The three consumer reporting agencies have an online presence, but can also be contact by telephone or mail. Contact information is as follows:
Equifax
www.equifax.com
P.O. Box 740241
Atlanta, GA 30374-0241
(800) 685-1111
Experian
www.experian.com
P.O. Box 2104
Allen, TX 75013-0949
(888) 397-3742
TransUnion
www.transunion.com
P.O. Box 1000
Chester, PA 19022
(800) 916-8800
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