What is a credit report? The Plastic Effect

credit factsA credit report is a record of your credit activities created by a consumer/credit reporting agency (CRA). Your credit report lists all accounts for which money has been lent to you and credit extended to you.

Your credit report includes financial information (e.g., your mortgage, loan, and credit card account balances), and your payment history (including on-time and late payments). Also included is a list of any legal actions you have taken (e.g., declaring bankruptcy, having debt canceled, etc.). Legal actions that have been taken against you (e.g., collections actions initiated against you, a repossession action initiated against you, or a legal judgment or tax lien recorded against you, etc.) are also listed in your credit report.

The most common type of CRA is a credit reporting bureau. The three major credit reporting bureaus in the United States are Equifax, Experian and TransUnion. The current contact information for these three credit reporting bureaus is included in Appendix A to The Plastic Effect.

The credit reporting bureaus routinely collect and record information from lenders who have loaned you money, credit card issuers, and other financial institutions who have extended credit to you.

A large number of credit reports include errors. The credit reporting bureaus obtain and record huge amounts of information on a daily basis. It is common for mistakes to be made by the credit reporting bureaus. It is also common for the entities reporting information to the credit reporting bureaus to make mistakes.

In the United States, the Fair Credit Reporting Act (FCRA)[i] gives you the right to contact the credit reporting bureaus and have errors removed from your credit report. The FCRA prohibits the credit reporting bureaus from reporting inaccurate, incomplete, or unverifiable information. In 2003, the FCRA was revised by the Fair and Accurate Credit Transactions (FACT) Act[ii] to allow consumers to obtain a free copy of their credit report from each of the three major credit reporting bureaus once per year.

Credit reports obtained from each of the three major credit reporting bureaus include similar categories of information, but each bureau presents the information in different formats. The order in which the information is listed also varies, as do the section headings and the layout of the reports. The information contained in each version of your credit report may also differ because not all creditors report information to all three of the major credit reporting bureaus.

The information contained in your credit report will generally fall into the following categories:

  • Personal Information
  • Account Information
  • Public Records/Legal Records
  • Adverse Accounts
  • Satisfactory Accounts
  • Inquiries Shared Only With You
  • Inquiries Shared With Others

The “Personal Information” section includes the following types of information:

  • Your name and other names associated with you (e.g., married and maiden names, and known aliases)
  • Social Security number
  • Date of birth
  • Current and previous addresses
  • Current and previous telephone numbers
  • Employment history

The “Account Information” section provides a key to help you understand the payment history information included in your credit report.

The “Public Records” section includes a list of civil legal judgments that may have been obtained against you. Such entries remain on your credit report for seven years. It is not the practice of the three report bureaus to report criminal convictions.

The “Public Records” section also includes any bankruptcies you may have filed. Such entries remain on your credit report for seven to ten years, depending on what type of bankruptcy was filed.

The “Adverse Accounts” section includes accounts that creditors consider to be unfavorable. Such entries remain on your credit report for seven years.

Each entry in the “Adverse Accounts” section includes information such as:

  • Creditor name and contact information
  • Date updated and date paid
  • Credit limit
  • Original balance and past due balance
  • Payment status
  • Account type and responsibility
  • Date opened and date closed

Table 1 provides a sample “Adverse Accounts” entry from a sample credit report for a credit card.

Table 1. Adverse Accounts Entry

OUR BANK Credit Card

Information

1234 Main StreetChicago, IL60603USA(800)OUR-BANKBalance: $1,234Date Updated: 08/27/2012Past Due: $99.34Pay Status: 120 days past dueAccount Type: RevolvingResponsibility: IndividualDate Opened: 07/07/1986

The “Satisfactory Accounts” section includes accounts creditors consider to be in good standing (i.e., no adverse information such as late payments, missed payments, or overdue balances). Such entries remain on your credit report for seven years.

Each entry in the “Satisfactory Accounts” section includes information such as:

  • Creditor name and contact information
  • Date updated
  • Original balance
  • Credit limit
  • Payment status
  • Account type
  • Responsibility
  • Date opened and date closed
  • Date paid

Table 2 shows a sample “Satisfactory Accounts” entry from a sample credit report for a utility company.

 Table 2. Satisfactory Accounts Entry

My Electric Company

Information

5678 Volt StreetChicago, IL60603USA(800)ELC-TRICBalance: $0Date Updated: 08/27/2012Past Due: $0Pay Status: CurrentAccount Type: OpenResponsibility: IndividualDate Opened: 11/11/1981

Table 3 provides a sample “Inquiries Shared Only With You” entry from a sample credit report for a credit card company creating a list of pre-approved credit offers. Such an inquiry is called a soft inquiry or a soft pull. A soft inquiry typically remains on your credit report for six months. These credit inquiries appear on your credit report when you receive it, but are not shared with any other party viewing your credit report. A soft inquiry does not affect your credit score (see Urban Legend 1).

Each “Inquiries Shared Only With You” entry includes information such as:

  • Requestor name and contact information
  • Request date

Table 3 shows a sample entry for a person who will be considered for a pre-approved credit card from the bank YOUR BANK.

Table 3. Inquiries Shared Only With You Entry

YOUR BANK MYD Card

Information

9123 Main StreetChicago, IL60603USA(800)MYD-CARDRequest Date: 08/27/2012

Table 4 provides a sample “Inquiries Shared With Others” entry from a sample credit report for a credit card company. Such an inquiry is called a hard inquiry or a hard pull and remains on your credit report for two years. A hard inquiry is an actual inquiry from a creditor that is used to determine your creditworthiness. Every hard inquiry directly affects your credit score (see Urban Legend 1).

Each entry in the “Inquiries Shared With Others” section includes information such as:

  • Creditor name and contact information
  • Request date
  • Inquiry type
  • Loan type and loan amount (if installment loan inquiry)
  • Permissible use

Table 4 shows a sample entry for a person applying for a new card from the bank OUR BANK.

Table 4. Inquiries Shared With Others Entry

OUR BANK MASCARD

Information

5678 Main StreetChicago, IL60603USA(800)MAS-CARDRequest Date: 08/27/2012Inquiry Type: JointPermissible Use: New Credit Card Application

The information and fields shown in Tables 1 – 4 are samples only. Remember, your credit report from each of the three credit reporting bureaus will include similar types of information, but the individual fields may be named differently and presented in different orders. The information reported to each credit reporting bureau may vary because not all creditors report to all three credit reporting bureaus.

pollys-pearls 50Polly’s Pearls of Wisdom:  As hard as I’ve tried, there’s no good way to give you this information as a single pearl, so think of it as a string of pearls! You need to be aware that under US Federal Law[iii], you can request a free copy of your credit report from each of the three major credit reporting bureaus once per year.

Information on obtaining your free credit report is available from the Federal Trade Commission (FTC) online at: (www.ftc.gov/freereports).

Your free annual credit reports are available online at one central location at: (www.AnnualCreditReport.com) or by calling

(877)322-8228. You can also request your free credit reports by downloading the “Annual Credit Report Request Form” from the FTC website and mailing it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA30348-5281.

Since you are entitled to one free credit report from each credit reporting bureau, consider ordering one of your credit reports from one of the credit reporting bureaus in each four-month period during a calendar year. This way, you can monitor your credit for free throughout the year.

Each credit reporting bureau may report different information, and may include different errors, so take advantage of your legal right and request your credit report from all three credit reporting bureaus.

Review the information on each of your credit reports and take action to correct any errors you find. If you find any errors in your credit report, you can dispute the errors electronically directly from your free credit report. The three credit reporting bureaus each provide you with a method to initiate a dispute directly from the display of your free credit report. You can also dispute any errors you find in writing.

The FTC publishes a document entitled “FTC Facts for Consumers – How to Dispute Credit Report Errors” that is available online at: (www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm).

The FTC document lists the necessary steps you must take, and includes sample letters to send to the credit reporting bureaus and other creditors.

In general, at least two steps are required for every incorrect entry you find on your credit report. You must write to both the credit reporting bureau that reported the error, and the appropriate creditor. In these letters, you must indicate which entry you want to dispute as inaccurate, and explain in detail why you think the entry is inaccurate.

For example, consider the “Adverse Accounts Entry” shown in Table 1. Suppose you reviewed your credit report and saw this entry. Also, suppose you do not have a credit card issued by OUR BANK.

It is necessary to correct this error immediately because it is an adverse entry and will negatively affect your credit score. To remove this entry, first, you must write to the appropriate credit reporting bureau, and explain that you do not have a credit card issued by OUR BANK. You must request the credit reporting bureau completely remove the entry. Second, you must write to OUR BANK, request they explain why the credit card entry was entered under your name, and request the error be immediately corrected with the credit reporting bureau.

If your credit report includes any negative information that is indeed accurate, only the passage of time will remove the entry from your credit report. The amount of time varies (depending on the type of information) from two years (for normal credit inquiries by creditors) to seven years (for negative information such as missed or late payments, etc.) to ten years (for certain types of bankruptcy and other negative information).

Unfortunately, the credit reporting bureaus are not required to provide you with a free credit score when you request a free credit report. In fact, the free credit reports do not include your current credit scores. How to obtain a free credit score will be discussed in the next section.

 


[i] What is a Credit Report?  Title 15 of the United States Code, section 1681 (15 U.S.C. §1681(c)) controls the behavior of credit reporting agencies. This law is known as the Fair Credit Reporting Act (FCRA).

[ii] What is a Credit Report?  Fair and Accurate Credit Transactions Act of 2003, Public Law 108-159. See the Fair Credit Reporting Act (15 U.S.C. §1681 et seq.) (www.ftc.gov/os/statutes/031224fcra.pdf).

[iii] What is a Credit Report?  U.S. Federal Law provides (Title 16 of Code of Federal Regulations (C.F.R.) Part 610 (16 C.F.R. §610)) that upon a request by a consumer and without charge, once in any 12-month period (in compliance with section 612(a) of the FCRA (15 U.S.C. §1681(a)), the consumer can receive one copy of their credit report for free from each of the three nationwide credit reporting bureaus: Experian, Equifax, and TransUnion.

 

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The Arizona Daily Independent has received permission to reprint portions of a timely new book “The Plastic Effect” focused on the urban myths of credit cards and their usage written by Polly A. Bauer, CPCS and Stephen Lesavich, PhD, JD. Future issues of the ADI will feature “Polly’s Pearls” included in each Urban Legend Myth. “The Plastic Effect” is Copyright by Coconut Avenue, Inc. All rights reserved. No unauthorized reproduction or duplication is permitted without written permission of Coconut Avenue, Inc.

4 Comments

  1. Congratulations Wayne and company!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! and along comes the next great adventure! What great news this is! Made me day!

  2. My girlfriend said yes, so I am now engaged! I secretly picked up the ring yesterday afternoon and had previously contacted the mariachi band from the Mexican restaurant. So when we were sitting at the table the band came up to the table and began “You Send Me” by Sam Cooke. She might have been thinking, “hmmm, that doesn’t sound Mexican!”

    When I began singing it with them backing me up, she became more suspicious, so by the time I went to my knee when I got to “now I find myself wanting to…marry you…and take you home” and pulled out the ring she knew what I was doing!

    Later the band came by again and sang a Spanish love song called Solemente Una Vez. Wow!

    • Congrats to the Rain Man, and to the future Mrs Rain Man! What a creative way to propose to the lady in your heart – over chips & salsa, no less! 🙂

  3. a measure of your actions in the past – which may or may not be accurate – but they don’t have another way – and it justifies them when you can’t pay to charge you more or give you none so that you’ll become compliant? A bad bowl of soup we swim in…

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