Credit Report Basics
A credit report is a report generated on an individual consumer with detailed information in regards to their past and current credit history. This report is generated by three separate credit reporting agencies known as TransUnion, Equifax and Experian. A consumer’s credit report will determine their overall worthiness for additional credit by showing a clear history of their ability to pay past debts. Essentially, a credit report tells a creditor whether or not to extend credit to a particular consumer. Here we go into more detail.
Credit Reporting Agencies
There are three major credit reporting agencies – Equifax, TransUnion and Experian. Each of these agencies work independently from one another and they are regulated by federal laws. A consumer is not considered a customer of these agencies, but creditors and lenders are. They assist creditors in determining a consumers overall worthiness to extend credit to.
The three credit reporting agencies collect data on a consumer from creditors that the consumer already does business with. They will collect types of accounts, the balances on those accounts as well as the overall payment history the consumer has put forth on those accounts. Some credit reporting agencies will also collect information from public records to record information such as bankruptcies, court judgments, tax records and even property records.
A credit reporting agency may not always have accurate information. That is why it is up to the consumer to verify if information on their credit report is accurate or not. When a discrepancy is found, it is up to the consumer, not the credit reporting agency, to prove that it is inaccurate.
Getting Copies of Credit Reports
By federal law, every consumer is eligible to receive one free copy of each credit report once per year. A consumer does not have to get all three copies at the same time. Many consumers that are performing credit monitoring on their own will spread out the credit reports by four months so that they can see what is being reported throughout the year, rather than once a year.
Common Credit Report Errors
Though credit reports tend to be accurate, there are some common errors that will appear on a consumers report as well. Some of these errors can include items such as:
-Typos in spellings of names or addresses
-Accounts added due to identity theft
-Incomplete information provided by the creditor to the reporting agency
-Error on the part of the creditor to update payment history correctly
Though some of these errors can be considered harmless, they all should be reported to the credit reporting agency no matter what. Often small errors like typos can be a result of identity theft.