Understanding Your Credit Report — Legal & Financial Implications
As a consumer, you should be aware that your credit report and the related credit score play a crucial role in your financial status. A good credit report not only will result in easier access to credit and lower interest rates but also may lead to better job opportunities and better housing. Therefore, you need to make sure that the report contains accurate information and that you address any problems with it.
The three main credit bureaus are Equifax, Experian, and Transunion. They produce similar but not identical reports, compiling information from landlords and employers of a consumer in addition to their creditors. They are permitted to provide a credit report to anyone who has a legitimate business interest in it, which is broadly interpreted. You have a right to receive a free copy of your credit report once a year through the Annual Credit Report Service.
Contents of a Credit Report
The report will include your name, Social Security number, birth date, contact information, and other identifying information. It also will list your current and past employers. The report will provide any information about you that can be found in public records, such as criminal convictions, judgments, bankruptcies, foreclosures, and tax liens. Credit bureaus also collect and list all of a consumer’s credit accounts, both open and closed. Other credit information in the report includes the type of each account, the account numbers, the dates that the accounts were opened and closed, the monthly payments and balance on each account, and the consumer’s payment history over the past two years. Finally, a credit report will provide information about people and entities that have previously received your credit report.
You should also know that credit bureaus are not allowed to collect and report certain types of information. These mostly relate to certain protected traits of consumers, such as their race, gender, religion, or national origin. In some cases, information that suggests that a consumer has a certain medical condition will be omitted, unless it appears in a statement provided by the consumer.
Getting Negative Information Off Your Credit Report
In general, most types of negative information on your credit report stay on the report for seven years. These include foreclosures, late payments, unpaid debts, accounts in collections, paid tax liens, and most student loans. Inquiries by entities to which you have applied for credit stay on the report for two years. Bankruptcies stay on the report for 10 years, and unpaid tax liens may stay on the report for much longer, up to 15 years or even indefinitely. (Meanwhile, favorable information remains on your report for seven years in most cases, although theoretically it could remain on your report permanently.)
If you are applying for certain types of jobs or high-value loans or insurance policies, negative information that is older than seven years may remain on the report. However, as a practical matter, the credit bureau may have removed this information.
You have a right under the federal Fair Credit Reporting Act to correct inaccurate or incomplete information on your credit report. Getting help from a credit counseling agency or an attorney can be useful. You can initiate a dispute online or by phone or mail. Unless a dispute is frivolous or irrelevant, the credit bureau must investigate it. It must either delete the information and notify you or reinvestigate the disputed items and provide you with a report on the results.
