“YOU AND YOUR CREDIT"
What is the first thing that a mortgage lender, the finance department of a car dealership, department store, Visa or Mastercard does when it wishes to extend credit to you? You guessed it! Run a credit report. That is exactly what we do when we receive a loan application. We run a credit report to ascertain the creditworthiness of the client who applied for the loan. Often, over the past year, we have found that what is reported by the credit bureau is not exactly what the client has told us we would find.
Once we notify the client of the derogatory contents of his or her credit report, the pleading question from the client is, what can I do to either clean up what is reported or remove misinformation summarized on the credit report? I have found that credit reporting and what it entails is one of the most misunderstood elements of the credit granting process. It is not taught in school. Parents do not usually talk about it during dinner. The most unfortunate aspect of today's credit driven society is that limited attention is paid to credit maintenance until one needs it. If you do not pay attention to what is on your credit report before you need credit, you may find yourself paying a higher interest rate for the credit you do need or you may be denied credit altogether. A misconception exists in many people's minds that credit bureaus rate one's credit. Credit bureaus do not rate one's credit. Credit bureaus such as Experian (formerly TRW), Equifax and Transunion are merely reporters of past payment history.
With the millions of entries received by the credit bureaus, there is definitely an opportunity for error on one's credit file. This is one reason that it is very important for an individual to review his/her credit report on an annual basis. This review will allow you to correct any mistakes that may be reported by or to the bureaus without the time pressure normally associated with a large purchase, such as a car or a home. The three bureaus on the West Coast used by most credit grantors are Experian, Transunion and Equifax. Each has a toll free number if you want a credit report. Currently the charge for each report is $8.00 (set by state law) per individual report. The following are the toll-free numbers for each bureau: Experian (800) 682-7654, Equifax (800) 685-1111 and Transunion (800) 851-2674.
When you request a credit report in writing be sure to include: first, middle and last name (including Jr., Sr., III etc.), current address and if less than two years, your previous address, Social Security Number, date of birth and signature. Be certain to include a copy of your driver's license or other ID (with current address) for identification purposes. If you have been denied credit, insurance (can you believe it?) or employment because of information on your credit report, the bureau used for the denial will, at your request, send you a free report. If there are inaccuracies on your credit report, correspond with all three credit bureaus about the problems.
Creditors may report your payment history to one, two or three credit bureaus. You must address all three . . . one will not tell the other. The creditor will have 30 days to respond to your request. If verification of the entry on your report is not received by the bureau from the creditor, the item in dispute will be eliminated or corrected by the credit bureau.
If the creditor responds and you still disagree, you have the right under the Fair Credit Reporting Act to insert into your file a 100-word statement explaining your side of the story. Here is a word of caution if you choose to submit a 100-word statement. If your credit report is pulled by a credit grantor, your statement, which is now part of your credit report (until the dispute is resolved), will be distributed to that creditor. You may not want to submit a general 100-word statement as any creditor, including a future employer, will have access to potentially detrimental information. For confidentiality and privacy the 100-word statement can be submitted by you as an attachment to a particular creditor's application, thereby giving you control over who sees it.