Credit Reports

The Fair Credit Reporting Act is the federal law that governs credit bureaus. This law was put in place to protect consumers from the powers that credit bureaus can have over people's lives. This law gives people the right to obtain a free credit report if they were denied credit due to information contained on the credit report.

This is important information to know considering that approximately one out of every four credit reports contain errors, and one out of every six contain errors that could cause denial of credit. Other errors that may be contained on a person's credit report are other people's information that may have similar names or social security numbers. Family members' information may also be contained on another family member's credit report. People should get a copy of their credit report at least once a year to make sure that there have been no mistakes or errors made that may affect their credit. This is especially true before you apply for credit, a mortgage or any other type of loan.

Once a person has received a copy of their credit report they should take a look to see what exactly is listed. Information that is usually listed on a credit report is a person's credit card accounts, charge accounts, loans, and items of public record such as tax liens, bankruptcies, and judgments. The credit report will also list each account on record that a person has, who the account is or was with, the amount borrowed, paid, and how timely the payments were made. It will also show if there were any accounts sent to collection agencies, defaulted loans, and accounts not paid in full. Businesses have a right to report to any or all credit bureaus, at their discretion. Previous credit grantors might have reported your credit experience to a credit bureau, all three credit bureaus, or may have not reported it to a credit bureau. With that said most large credit grantors report to Transunion, Equifax, or TRW.

Once a person has reviewed the information contained on their credit report and they find a mistake or mistakes, then they have the right under the Fair Credit Reporting Act to dispute the accuracy of information. The person must dispute directly to the credit reporting agency by sending a letter with their complete name and address clearly identifying each item they are disputing, explaining why they are disputing the information, stating the facts and requesting a deletion or correction.

When reviewing a credit report a person also wants to take a look at their credit obligations that they have outstanding along with their payment history. Examples are credit cards, mortgage payments, car loans and student loans. Having a large dollar amount of outstanding debts and late payments can negatively affect a person's credit score and therefore limit their chances in the future if they should need credit or a loan. Generally, unfavorable information stays on a person's credit report for seven years for most accounts and ten years for bankruptcies.