FAQs

Who are the 3 main Credit Bureaus?

Equifax  Experian  Transunion   

The three main credit bureaus are: Equifax, Experian, and Trans Union. All three major credit bureaus collect, store, and sell information about everyone’s credit histories to help establish a consumer’s credit worthiness. The credit bureaus are private for-profit companies that collect the information about consumers and then sell it to businesses that are legally permitted to see your credit report.  This is where your “Pre-Approved” offers come from in the mail.

How can I stop companies from using my personal information for marketing?

More organizations are offering consumers choices about how their personal information is used. For example, many let you “opt out” of having your information shared with others or used for marketing purposes. The best way to opt out of offers and third parties pulling your information is to go to either the credit bureau websites and click on “Contact Us” page and then look for the information for Opt Out or go to www.optoutprescreen.com.

How your credit score is is calculated?

 

Payment History (35%)slide_35

  • Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, mortgages, etc.)
  • Presence of adverse public records (bankruptcy, judgments, liens, etc.), collection items, and/or delinquency (past due items)
  • Severity of delinquency (how long past due)
  • Amount past due on delinquent accounts or collection items
  • Time since (frequency of) past due items (delinquency), adverse public records (if any), or collection items
  • Number of past due items on file
  • Number of accounts paid as agreed

 

Outstanding Debt (30%)slide_30

  • Amount owing on accounts
  • Amount owing on specific types of accounts
  • Lack of a specific type of balance, in some cases
  • Number of accounts with balances
  • Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
  • Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)

Length of Credit History (15%)slide_15

  • Time since accounts opened
  • Time since accounts opened, by specific type of account
  • Time since account activity

 

 

 

 

 

slide_10Types of Credit Currently in Use (10%)

  • Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, etc.)

New Credit (10%)slide_10_2

Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
Number of recent credit inquiries
Time since recent account opening(s), by type of account
Time since credit inquiry(s)
Re-establishment of positive credit history following past payment problems

Your credit scores are used by creditors to measure the ‘risk factor’ of a consumer who is applying for a loan or credit line. The credit score is place to reflect the financial responsibility of a consumer and includes the past and present credit use. Creditors use the score to determine how a consumer will pay on their possible new loan or credit line.

 

What information is on your credit report?three_fingers

Your credit report is essentially your financial resume’.  It contains information this is grouped into five categories.  While we know the information and its contents; the specific formula to calculate credit scores were created by the Fair Isaac Company and is known as the FICO Score.

According to the Sun-Times (January 18, 2011) “Some studies show that up to 80 percent of all credit reports have some type of error.”

Unfortunately, with an alarming number of credit files containing serious errors; this could cause the denial of credit, a loan, or a job… So we highly encourage you to monitor your credit report to minimize or eliminate future credit denials. Remember, keeping a good credit report is essential to your New Start and your financial health.

The five categories are:

1.       Identification Information: Information such as the name of the individual, date of birth, employment, current and previous residential addresses, and Social Security number.

2.      Public Record Information: Information derived from financial-related public records, such as records of bankruptcies, foreclosures, tax liens, garnishments, and other civil judgments.

3.      Inquiry Information: Identifies the individuals or companies that have requested information from an individual’s credit file, the date of inquiry, and an indication of whether the inquiry was by the consumer or for the review of an existing account, or to help the company decide on a potential future account or financial relationship.

4.      Trade Line Information: Detailed information reported by creditors and other furnishers on each current and past loan, lease, or other debt (such as utility and medical debts).  This information also includes date opened, date of last activity, date reported and payment history.

5.       Collection Account Information: Information reported by collection agencies regarding credit accounts and other debts.  This information also includes date opened, date of last activity, date reported and payment history.

How long do the credit bureaus keep items on your credit file?

The credit bureaus keep your personal credit history for approximately 7 to 10 years; from the date of last activity or date of the original delinquency.

Closed/inactive accounts = 10 Years
Chapter 7 & 13 bankruptcies = 10 Years
Derogatory/collection accounts = 7 Years
Public records = 7 Years
Unpaid federal tax lien = indefinitely

What is the worst thing that appears on my credit report?

There are 10 basic items that look bad on your credit report; the list below is from the best to the worst…

  • Credit inquiries
  • Credit rejections
  • Late payments
  • Past due and unpaid payments
  • Court judgments
  • Collections
  • Repossession
  • Foreclosure
  • Bankruptcy
  • Unpaid Federal Tax Lien

The Consumer Credit File Rights under State and Federal Law

You have a right to dispute inaccurate information in your credit report by contacting the credit bureau directly.  However, neither you nor any “credit repair” company or credit repair organization has the right to have accurate, current, and verifiable information removed from your credit report. The credit bureau must remove accurate, negative information from your report only if it is over 7 years old. Bankruptcy information can be reported for up to 10 years. You have a right to obtain a copy of your credit report from a credit bureau. You may be charged a reasonable fee. There is no fee, however, if you have been turned down for credit, employment, insurance, or a rental dwelling because of information in your credit report within the preceding 60 days. The credit bureau must provide someone to help you interpret the information in your credit file. You are entitled to receive a free copy of your credit report if you are unemployed and intend to apply for employment in the next 60 days, if you are a recipient of public welfare assistance, or if you have reason to believe that there is inaccurate information in your credit report due to fraud. You have a right to sue a credit repair organization that violates the Credit Repair Organization Act. This law prohibits deceptive practices by credit repair organizations.

You have the right to cancel your contract with any credit repair organization for any reason within 3 business days from the date you signed it. Credit bureaus are required to follow reasonable procedures to ensure that the information they report is accurate. However, mistakes may occur. You may, on your own, notify a credit bureau in writing that you dispute the accuracy of information in your credit file. The credit bureau must then reinvestigate and modify or remove inaccurate or incomplete information. The credit bureau may not charge any fee for this service. Any pertinent information and copies of all documents you have concerning an error should be given to the credit bureau. If the credit bureau’s reinvestigation does not resolve the dispute to your satisfaction, you may send a brief statement to the credit bureau, to be kept in your file, explaining why you think the record is inaccurate. The credit bureau must include a summary of your statement about disputed information with any report it issues about you. The Federal Trade Commission regulates credit bureaus and credit repair organizations. For more information contact:  The Public Reference Branch, Federal Trade Commission, Washington, D.C. 20580