Wednesday, August 28, 2013

Your Credit Report

Yesterday, we covered the credit report in class. We discussed how consumers can now check their credit histories once a year for free. Then we looked at the steps to take to correct any misinformation.  

That last topic was important. Many individuals are not aware they can challenge credit reports. The assumption is the information is collected by agencies working under the auspices of the federal government and their findings are final. 

Not so. While the three credit rating agencies are overseen by the Federal Trade Commission, they actually work independently and compete with each other. They do have to abide by federal regulations since they are serving the public and working with financial info, but federal agencies they are not. 

How credit information is gathered on each individual depends on which creditors each agency works with, which is why consumers are urged to regularly check their reports with each individual company. So one report may vary slightly from the other, and at times that can mean the difference between being granted a loan or not. 

There are three ways to get a copy of the report. Consumers can either email their requests, take the traditional route and write to the agencies or get that information online through the FTC's site. If you choose the last option, corrections can be made before logging off. 

Keep in mind that any negative information that hits your reports will remain for up to seven years. Bankruptcies stay for ten years. It's important to check your reports for errors, especially with all the contradicting facts consumers are exposed to. For example, one woman described how a previous landlord gave her permission to break her lease, only to turn around and make a complaint for unpaid rent that somehow made its way on her credit report. She was later turned down for a car loan. 

Another woman discovered she was solely responsible for an outstanding car loan although it was jointly owned with her spouse before their divorce. The FTC's website specifically states that both partners are responsible for all joint loans. Not in the latter women's case. The judge had ruled she was responsible for the loan, although her husband had incurred penalties and interest on it. Those hit her credit report as well. 

To learn more, visit the FTC's website at www.ftc.gov/

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