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FOR THE CONSUMER
Building a Better Credit report
f you’ve ever applied for a credit card, a personal loan, or insurance, there’s a file about you. This file is known as your credit report. It is chock full of information on where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy. Credit reporting companies sell the information in your report to creditors, insurers, employers, and other businesses with a legitimate need for it. They use the information to evaluate your applications for credit, insurance, employment, or a lease. Having a good credit report means it will be easier for you to get loans and lower interest rates. Lower interest rates usually translate into smaller monthly payments. Nevertheless, newspapers, radio, TV, and the Internet are filled with ads for companies and services that promise to erase accurate negative information in your credit report in exchange for a fee. The scam artists who run these ads not only don’t deliver — they can’t deliver. Only time, a deliberate effort, and a plan to repay your bills will improve your credit as it’s detailed in your credit report. The Federal Trade Commission (FTC), the nation’s consumer protection agency, has written this booklet to help explain how to build a better credit report. It has six sections:
explains your rights under the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act. tells how you can legally improve your credit report. offers tips on dealing with debt. cautions about credit-related scams and how to avoid them. offers information about identity theft. lists resources for additional information.
Section 2 Section 3 Section 4 Section 5 Section 6
SeCtion 1 the Fair Credit reporting aCt
The Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness, and privacy of information in the files of the nation’s credit reporting companies. The FTC enforces the FCRA with respect to these companies. Recent amendments to the FCRA expand consumer rights and place additional requirements on credit reporting companies. Businesses that provide information about consumers to credit reporting companies and businesses that use credit reports also have new responsibilities under the law. Here are answers to some of the questions consumers have asked the FTC about consumer reports and credit reporting companies.
Q. do i have a right to know what’S in my report?
A. You have the right to know what’s in your report, but you have to ask for the information. The credit reporting company must tell you everything in your report, and give you a list of everyone who has requested your report within the past year — or the past two years if the requests were related to employment.
Q. what type oF inFormation do Credit reporting CompanieS ColleCt and Sell?
A. Credit reporting companies collect and sell four basic types of information: Identification and employment information: Your name, birth date, Social Security number, employer, and spouse’s name are noted routinely. The credit reporting company also may provide information about your employment history, home ownership, income, and previous address, if a creditor asks. Payment history: Your accounts with different creditors are listed, showing how much credit has been extended and whether you’ve paid on time. Related events, such as the referral of an overdue account to a collection agency, also may be noted. Inquiries: Credit reporting companies must maintain a record of all creditors who have asked for your credit history within the past year, and a record of individuals or businesses that have asked for your credit history for employment purposes for the past two years. Public record information: Events that are a matter of public record,