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The Credit Reporting Agencies -
TransUnion, Equifax and Experian (formerly TRW) are the three national credit
reporting agencies that keep records on consumers. The reporting agencies work
with lenders, creditors, insurers and employers to update and distribute your
information to the appropriate institutions. Here's an example of how the
system works:
- When you apply for a new credit card
the creditor requests a copy of your financial history from the reporting
agencies.
- The creditor uses your
credit reports and scores along with income and debt
information to determine what rates to offer.
- You start to use the new credit card
and the creditor reports your activities to the credit reporting agencies every
30 days.
- The credit reporting agencies update
your credit report as they receive new information from creditors or
lenders.
- Your credit profile changes based on
your financial activity. The next time you apply for a credit card or loan, the
process repeats.
Your Credit Report - Your credit
report is divided into six main sections: consumer information (address,
birthday and employment), consumer statement, account histories, public
records, inquiries and creditor contacts. When you open a new account, miss a
payment or move, these sections are updated with new information. The old
records will stay on your credit report for about 7 years.
Not all
creditors report to all three agencies and the agencies don't share their data
so your reports from TransUnion, Equifax and Experian could be
substantially different from each other. That's why it's important to check
your three credit reports every few months to ensure that the information is
accurate and up-to-date.
Correcting Inaccuracies - Under the
Fair Credit Reporting Act, consumers are protected from having inaccurate
information on their credit reports. If you find an inaccurate record on your
report, try contacting the creditor or lender associated with the mark first.
These companies can usually correct the mistake and send an update to the
credit reporting agencies. If you can't make progress this way, you can also
dispute the inaccuracy directly with the credit reporting agencies.
Working the System - Keeping your credit reports healthy will
improve your credit scores and help get you the best rates on major purchases.
We recommend that you check your credit reports every 3-6 months in order to
guard against damaging inaccuracies and identity fraud. Routine check-ups along
with paying your bills on time, keeping your credit card balances below 35% of
their limits and correcting any negative inaccuracies will help you maintain a
healthy credit profile. |
