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A
credit report is a document that summarizes
your history of credit usage. Your credit report
also contains personal information including your
social security number, previous addresses, other
names you’ve used (such as maiden name),
information about liens, defaults, bankruptcies
and other public information,
credit card information including payment
history, and the names of
individuals/organizations who recently pulled
copies of your credit report.
A credit report definitely tells a lot about you.
In fact, your
credit score is derived from the information
it contains. That’s a number that can positively
or negatively impact your life. Mistakes on your
credit report will lower your credit score which
is why it’s so important to regularly review the
information your credit report contains. It’s up
to you to ensure its accuracy.
Credit reporting agencies, more commonly known as
credit bureaus, are responsible for preparing
credit reports. Lenders voluntarily forward
credit information to the various credit bureaus.
Using massive computer databases, the submitted
information is sorted and appended to millions of
different credit reports. Receipt and organization
of credit information occurs every single day and
because much of the work is computerized, the
updated information appears on a credit report
almost in real time.
The
Fair Credit Reporting Act (FCRA) was created
in part to protect consumers from unwarranted
access to so much personal information. The Act
outlines who can access a credit report and the
circumstances under which that third party is
entitled to such access. Interestingly, credit
lenders can obtain copies of your credit report in
order to continually monitor how you are handling
your financial obligations.
In the event a lender identifies an ongoing
problem, or feels a problem is likely to develop
in the future, the lender can take whatever action
it deems appropriate to protect its interests.
Raising
interest rates and lowering
credit limits on the
credit cards it issues to you are examples of
actions lenders can take without first getting
your approval.
Financial experts advise that you should review
the information on your credit report for accuracy
at least annually. Since each credit bureau
creates its own credit report, to be effective you
need to obtain a copy from each of the major
credit bureaus in your area. In the United States,
there are three:
Equifax,
Experian and Trans Union. Should you identify
a discrepancy, it’s possible you can work with the
credit bureau to correct it. You must, however,
follow the credit bureau’s credit report dispute
resolution procedure exactly.
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