You’ve been told time and time again the your credit report is an important part of your financial life. You’re bombarded with messages telling you to check your credit report regularly so you can be sure it’s correct and updated properly.
Sounds good, right? Having a correct and updated document that’s important to your finances is a worthy goal.
The problem is that your credit report feels like an underground document, hidden from view and passed in the way spies exchange classified information in some Cold War movie.
No wonder most people have no idea what’s in their credit reports.
With that in mind, let’s break it down so you can understand it better.
What is a Credit Report?
Your credit report contains a record of a your debt repayment as well as personal history that may impact your ability to meet your financial obligations in the future.
That record includes your credit history from a number of sources, including banks, credit card companies, collection agencies, and governments. It also contains information about your employer, residence, and who else has been looking at your credit report for the purposes of collecting a debt or extending new credit to you.
There’s no legal definition of a credit report, though the Fair Credit Reporting Act uses the term “consumer report” to define a credit report. Under the law, a consumer report is defined as
any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for—
- credit or insurance to be used primarily for personal, family, or household purposes;
- employment purposes; or
- any other purpose authorized as a permissible purpose under the Fair Credit Reporting Act.
The law uses a broad definition because it’s designed to protect you from consumer reporting agencies spreading false information about you in any form – your credit as well as your reputation.
The Credit Reporting Agency
Under federal law, a credit report is information provided by a consumer reporting agency.
A consumer reporting agency is a company that collects and sells information about a person’s creditworthiness. The company’s sole job is to collect information it considers relevant to your credit habits and history, and to then pass along that information to its customers.
The best known credit reporting agencies are Equifax, Experian and TransUnion that collect information about your loans, mortgages, student loans, and credit cards. But these three companies are only the tip of the iceberg when it comes to credit reports.
There are also dozens of speciality credit reporting agencies the collect records about very specific aspects of your life. Examples include:
- personal healthcare information;
- medical and prescription drug history;
- check writing history;
- rental history and evictions;
- income and employment history;
- casino markers and repayment; and
- homeowner and auto insurance claims.
The Consumer Financial Protection Bureau maintains a complete list of all credit reporting agencies. You can take a look at the 2015 edition by clicking here.
Information On Your Credit Report
Your credit report is a compiled from the credit file held by the credit reporting agency, and contains information such as:
- current debts;
- debts that are outstanding but not paid;
- collection accounts;
- lawsuits and judgments against you;
- current and past employers;
- current and past home addresses and phone numbers;
- your Social Security number and date of birth;
- names of entities that have requested your credit report; and
- names of entities you have granted access to your credit report.
Speciality credit reports may contain additional information such as rent and utility payment history, medical claim information, and other data designed for the purpose of the entity ordering the reports.
How Long Information Remains On Your Credit Report
Federal law gives you the right to a credit report that is accurate and free from outdated information. The law doesn’t define what constitutes outdated information, though Experian has stated the following:
- All delinquent accounts are deleted seven years from the original delinquency date, which is the date the account first became delinquent and was never again current;
- Chapter 13 bankruptcy is deleted seven years from the filing date because it requires at least a partial repayment of the debts you owe.
- Chapter 7 bankruptcy is deleted 10 years from the filing date because none of the debt is repaid.
- Civil judgments remain seven years from the filing date.
- Unpaid tax liens can remain on your credit report for 15 years from the filing date, and paid tax liens remain seven years from the paid date.
Other credit reporting agencies, especially speciality credit reporting agencies, may keep certain types of information for a longer or shorter period of time depending on whether that information is considered relevant.
Who Can See Your Credit Report
Only those with a permissible purpose are allowed access to your credit report. Without having a reason plucked from the language of the statute, it’s not permitted.
Among those who have a permissible purpose are:
- an existing or potential creditor in connection with a credit transaction;
- a potential employer, so long as you consent to the release;
- an insurance company can get a copy of your credit report in connection with underwriting a policy for you;
- the government in connection with issuing a government license or other benefit (such as public assistance); and
- whenever there’s a legitimate business need.
In that way, Congress ensured that you have the protections of privacy when it comes to the release of your information.
Getting A Copy of Your Credit Report
Federal law gives you the right to get a free copy of your credit report once a year. To order your free annual credit report from Equifax, Experian and TransUnion just take one of these three simple steps:
- Log on to www.annualcreditreport.com
- Call 1-877-322-8228, or
- Complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
If you’ve already received a copy of your free annual credit report you can purchase a copy at any of the following places:
- Experian: www.experian.com
- TransUnion: www.transunion.com
- Equifax: www.equifax.com
You can get a copy of a specialty credit report directly from the agency that maintains the report.
If you apply for something – credit, insurance, a job, new utility service, or a rental lease – and are denied because of information in your credit report then you have the right to a free copy of your credit report. Your request must be made within 60 days of receiving your denial notice.
Your Credit Report Can Make – Or Break – You
Once you understand the myriad ways in which your credit report impacts your daily life, it’s easy to see why it’s such a crucial document.
Take good care to make sure the information in your credit report is accurate and up to date at all times. After all, you never know when you’ll need to rely on it for something important.