Question: Why is a credit report important?
Answer: The content of your credit report is the sole determining factor in generating a conventional credit score such as a FICO score. This number will be used by lenders, banks, finance companies and credit card companies to determine whether you will be approved for a loan or credit, and what interest rate you will pay or what costs you will pay for use of that credit. Lenders, insurers, landlords, employers and others may also obtain your credit report to assess how responsible you are with managing your finances. Now, more than ever, it is crucial to access, understand and cultivate the contents of your credit report.
Q: Why should you review the contents of your credit profile from all three credit bureaus?
A: Up to 40 percent of credit reports contain errors (unrelated to actual credit performance) that may result in loan and credit denials or approvals with higher interest rates and/or greater costs for the credit obtained.
The only way to prevent this from happening is to monitor what is being reported and seek correction of any errors. It is imperative that you routinely review your credit profile with each nationwide credit bureau (TransUnion, Experian and Equifax), as each bureau uses different reporting methods and your credit profiles are constantly changing.
Q: What is the best way to get a copy of your credit report?
A: The best way to get a free copy of your credit report is to fill out and mail the annual credit report request form and fill in the ovals to get a report from each nationwide credit bureau.
You can also get a free credit report every 12 months from each of the nationwide credit bureaus by visiting www.annualcreditreport.com or calling 877-322-8228.
Q: What is a credit score and how is it calculated?
A: A credit score is a number that predicts how much of a credit risk you will be and is calculated based solely on information in your credit profile/credit report. The most commonly used score is the FICO score, which is calculated based on criteria contained in a scoring model which most often is different from what common sense will tell you is credit-worthy behavior. It is important to obtain guidance on how to use your credit in a manner that will increase your credit score.
Q: What are your rights when credit information is accessed and results in a credit, insurance or employment denial?
A: You should receive an adverse action notice, which will inform you of the source of the credit report and how to obtain a free copy of the report.
Make sure to request the free copy and review it thoroughly to make sure all information is reported accurately. Seek guidance to correct inaccurate reporting and how to improve your credit profile.
If your credit score was also used, you will be informed of the scoring model used, how the score was calculated and the four top factors influencing the score. This will enable you to determine if all of your reported information is accurate, and/or identify ways you may be using your credit which is harming your credit score.
Q: How can you correct errors found on your credit report?
A: You have the right to dispute inaccurate reporting. The dispute must be submitted in an effective format and manner to both the furnisher and the credit reporting agency to have any chance of being successful, or preserve your right to assert a legal claim for damages.
Once a dispute is received, the credit reporting agency must inform the furnisher of the nature of the dispute and both the credit reporting agency and furnisher have 30 days to conduct a reasonable investigation of the dispute. You are then entitled to be informed of the results of the investigation and will receive a free copy of the credit report if the dispute results in a change to the credit report.
Q: What are your rights if your dispute of inaccurate reporting is ignored or proper action is not taken to correct errors?
A: If the investigation is not conducted properly and you are damaged by the retained errors, you have a legal right to assert claims to have the reporting corrected and to be compensated for your damages. This claim is very effective to obtain permanent correction of the inaccurate reporting and includes mandatory reimbursement of your attorney’s fees and possibly punitive damages.
