Understanding Your Credit Report: Questions and Answers

Establishing and maintaining good credit can be an invaluable asset for managing your finances. Your ability to borrow money for a home, education and other goals can hinge on your credit history. Some common questions about credit reports are answered below.

I know credit bureaus collect and distribute a lot of information. Are there any protections regarding my privacy?

You're right, a lot of information is passed back and forth. The three major nationwide credit bureaus are Experian (www.experian.com), TransUnion (www.transunion.com) and Equifax (www.equifax.com).

Your privacy is protected in two ways. First, the only personal information collected is what is needed for identification purposes. This may include your name, current and previous addresses, Social Security Number, year of birth, employer and the initial of your spouse's first name if you are married. Information regarding race, religion, gender, salary, personal assets, medical history, personal background, lifestyle or criminal record is not collected.

Second, access to your credit report is limited. It is available only to you and to organizations that have a legitimate business need for it, usually for credit granting, insurance underwriting and employment purposes. (Your year of birth is suppressed in reports going out for employment purposes.) It is against the law for any person or business to obtain a credit report under false pretenses.

In addition, the credit bureau may identify for you any business that has obtained your credit history. You have a right to know who has seen your report.

What kind of information do credit bureaus collect, and how long does it remain on my report?

Credit bureaus gather information supplied by your creditors. This includes how much credit you have available, whether you've had any 30- or 60-day late payments, and whether any accounts have been referred to a collection agency. Your credit report may also contain information that's part of the public record, including bankruptcies, foreclosures, liens and judgments against you. Bankruptcies remain on your credit report for ten years. Other negative information is eliminated after seven years.

I applied for a loan, and was turned down. When I contacted the credit bureau, they couldn't tell me why I had been refused. Why not?

Credit bureaus do not make credit granting decisions, they only provide a report of your credit history. Many creditors rely heavily on your credit history when deciding whether to grant credit, but most consider a number of other factors as well. Decisions about whether credit is granted or not, and why, are not reported to credit bureaus.

If you are denied credit based on your credit report, you are entitled to receive a copy of that report, free of charge. However, your request must be made within a certain time frame. Federal law requires the credit bureau that prepared the report to send you a free copy if you request it within 30 days after your credit application was rejected; however, all three major nationwide credit bureaus will honor a request made within 60 days.

The Fair Credit Reporting Act (FCRA) requires all three major national credit reporting companies (Experian, Equifax and TransUnion) to provide you with a free copy of your credit report, at your request, once every 12 months. Do not contact the three credit reporting companies individually for your free annual credit report. They are providing free reports only through annualcreditreport.com. You can also call 1-877-322-8228 or complete and mail an Annual Credit Report Request Form to:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281