What Are the Three Credit Score Reporting Agencies of the Federal Government?

There are three nationwide credit reporting agencies in the U.S.: Experian, TransUnion and Equifax. These are all for-profit businesses and are in no way owned by the federal government. The companies' sheer size, though, has made them widely accepted as the recognized American credit agencies by consumers and the federal government. The three companies have even established a trade organization called the Consumer Data Industry Association to establish reporting standards and lobby for their interests.

Experian

Experian, headquartered in Dublin, Ireland, employs approximately 15,000 people in 40 countries. The company maintains credit information on approximately 215 million U.S. consumers Besides from its place as one of the big three credit reporting agencies, the corporation also provides address information for more than 20 billion promotional mail pieces to more than 100 million households every year.

Experian

U.S. Headquarters

475 Anton Blvd.

Costa Mesa, CA 92626

714-830-7000

experian.com

TransUnion

TransUnion was founded in 1968 when the Union Tank Car Company, a railcar leasing operation, created the parent company and later purchased a credit reporting agency. It is headquartered in Chicago and holds credit histories on an estimated 500 million consumers across 25 countries. The corporation has also expanded into business-to-business and direct-to-consumer offerings.

Transunion Corporation

555 W Adams St Fl 6

Chicago, IL 60661-3719

312-258-1717

transunion.com

Equifax

Equifax, founded in 1899 as the Retail Credit Company, is headquartered in Atlanta. The company is the oldest of the three agencies. It holds information on more than 400 million credit holders across the globe. The corporation has had a strong focus on the business-to-business sector, but also sells businesses credit reports, demographic data and software.

Equifax

1550 Peachtree NE

Atlanta, GA 30309-8000

404-885-8000

equifax.com

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How to Delete Tax Liens Off Credit Report

The IRS, upon its discretion, may place a tax lien on your properties for your failure to pay your tax obligations within a specified time frame. This action gives the IRS legal claim on the property that is subject of the tax lien until you are able to make full payment of your tax obligations. A tax lien can seriously affect your personal credit score and will make the sale of your personal property complicated. Payment of the tax obligations does not always get reported to the credit agencies, which means the lien may still show on your credit. You can take action to make sure that the error is corrected and the tax lien is removed from your credit report.

Instructions

How to Delete Tax Liens Off Credit Report

1

Request a copy of your credit report from each of the three credit reporting agencies (TransUnion, Experian and Equifax). You can request a copy of your credit report online from each agency website at TransUnion.com, Experian.com and Equifax.com, or from one source such as FreeCreditReport.com. If you prefer, you can also contact the agencies via phone. Review each credit report to make sure the tax lien you paid off has been removed.

2

Dispute the released tax liens not reflected in the credit report. Write a dispute letter to each agency that is still showing the tax lien. Explain that the tax lien has been paid-in-full and that you would like the lien to be removed from your credit report. Include a copy of the tax lien removal letter that was provided to you by the IRS when you paid the lien, or check the public records office of the county clerk's office that shows the lien was satisfied (Certificate of Release of the subject tax liens).

3

Send and confirm receipt. Once you submit the letter of dispute and supporting documentation, according to the dispute process steps listed on each credit report, you'll receive a confirmation email or letter from the agencies you're disputing the lien with. If you do not receive a confirmation within seven business days, then contact the credit agency by phone.

4

Wait for response. Once you receive confirmation that the agency or agencies have received your dispute, it can take up to 30 days for the agency to complete the investigation and remove the tax lien from your credit report.

5

Confirm removal. You'll receive a letter that confirms the removal of the lien from your credit report from each agency that was erroneously still reporting it. Once you receive the letter, or after the 30-day waiting period has passed, request another copy of your credit report to verify that the lien was removed.

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Why Do Lenders Have Different Credit Scores Than Consumers?

Before applying for a loan, consumers often pull their own credit scores to evaluate their eligibility to borrow money. You may pull your credit score before your lender does, but that does not guarantee that the credit score you pull will be identical to the one your lender will review.

Facts

Your credit report determines your credit score, but depending upon who you order your credit score from, it may be calculated differently.

Types

When most consumers order their credit score, they order it from either the credit bureaus or a third-party website. They are then provided a consumer credit score. Lenders order FICO scores directly from the Fair Isaac Corporation.

Options

You can order your FICO score directly from the Fair Isaac Corporation by visiting myFICO.com. You can also request that the credit bureaus provide you with a FICO score rather than a consumer credit score.

Considerations

Consumers cannot order their Experian FICO scores, only their FICO scores from TransUnion and Equifax.

Effects

If you are turned down for credit due to your lender receiving a much lower credit score than the consumer credit score you pulled, the Fair Credit Reporting Act gives you the right to request a free copy of your credit report.

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How Can I Raise My Credit Score in One Year?

It doesn't take much time to lower your credit score, but raising it is a different story. Once creditors have been burned, it's going to take some time for you to win their trust again. One year is plenty of time to raise your credit score. All you have to do is fix the mistakes you've made and avoid making them going forward. Once you have made these adjustments, your credit score will improve steadily.

Instructions

1

Examine your credit report and fix any mistakes you find. A 2004 survey by the U.S. Public Interest Research Group found that 25 percent of credit reports contained errors serious enough to lead to a denial of credit. Dispute any serious errors by writing to the credit bureau that reported them.

2

Get past-due accounts current as soon as possible. Concentrate on accounts that are 30 days or more past due as these are the ones that ding your credit score the most, by as much as 60 to 110 points, according to Liz Pulliam Weston, a personal finance columnist for MSN Money.

3

Pay down debt. A large portion of your credit score is based on what's called your debt-to-available credit ratio, or the amount of credit you have available divided by current debt. CreditCards.com recommends keeping this ratio below 35 percent. Paying down debt is also important in avoiding high interest payments; the more interest you pay, the less of your payment goes toward principal.

4

Use credit responsibly going forward. Use credit cards only for everyday purchases that you can afford to pay off every month, or for emergencies. Pay bills on time every month, and pay off in full when possible. If you can't pay off entire balances, pay as much as you can.

5

Refrain from opening new credit card accounts or closing old ones. Opening new cards can lower your score slightly, while closing accounts can remove positive credit history and also lower your available credit, which can cause your debt-to-available-credit ratio to rise.

6

Ask for a break. Pulliam Weston says that if you have been a good customer, your lender or credit card company may agree to erase a late payment. She recommends making the request in writing and says your chances will be better, the better your history is with the lender and the better your credit is overall.

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Does Savings Affect a Credit Score?

When you apply for new credit, whether a car loan or mortgage, or a credit card at your favorite store, chances are that the lender will check your credit score. Your score, commonly known as the FICO score, is a snapshot of your creditworthiness based on the information in your credit report. While your credit score reveals a lot about your financial picture, it does not show everything.

Calculating Credit Scores

The FICO calculation is based on a formula developed by the Fair Isaac Corp. Using data from your credit report, your score is based on your payment history, the amount you owe, the length of your credit history, how many new accounts you've applied for and the type of accounts you have. Each of these factors is weighted differently. Your payment history and the amount you owe are the most important factors, making up almost 70 percent of the overall score in most cases. However, everything in your credit score is based on your credit accounts, such as credit cards and loans. Your bank accounts are not considered in the score, unless you fail to pay money you owe to the bank for overdrafts or fees and the account goes to collections.

FICO Expansion Scores

Because some people have limited credit history, Fair Isaac developed the FICO Expansion Score. This score assesses your history with creditors that do not traditionally appear on a credit report, such as landlords, payday loan companies and bank accounts. Information about your banking history is culled from databases such as ChexSystems, which monitors bounced checks and overdrawn accounts. If you consistently overdraw your savings account, your bank may report it to this database, which will then influence your FICO Expansion Score and your ability to get new credit.

Pay Down Debts

While your savings does not influence your credit score, carrying a large amount of debt while building your savings may not be your best bet. Keeping enough cash on hand to cover your expenses in an emergency -- most experts recommend having anywhere from three to six months of living expenses on hand -- is a good idea, but beyond that, you're better off to use that cash to pay down your debts. Paying down your debts saves you money in the long-term, as you'll pay less in interest. It also improves your credit score, as a high credit score generally requires low balances and plenty of available credit.

Save for Emergencies

Keeping a healthy savings account can indirectly help you maintain a good credit score, as it helps you cover the unexpected expenses that you might otherwise use credit for, such as emergency car repairs. Aim to save 10 percent of your income each month towards emergency expenses. Even if you don't have enough to cover your entire expense, and have to use some credit, you'll still reduce your overall debt by paying at least some cash. If you want to use your credit card to earn rewards, having enough savings allows you to pay the balance in full when the bill arrives. This keeps both your payment history and amount you owe in good standing, and your credit score intact.

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How to Fix Your Credit Rating in Australia

Your personal credit rating in Australia can make the difference between approval for credit and an application being declined. If your credit rating is low, there are several ways to fix your credit score, including checking for errors on your credit report and ensuring your bills are paid on time.

Instructions

1

Apply for your credit report online. The Australian government has given authority to two credit reporting agencies: Dun & Bradstreet and Veda Advantage (see Resources). Both agencies are required to provide a free copy of your report by mail, and your report takes about 10 days to arrive. You must provide personal information to credit reporting agencies as outlined by Australia's Office of the Privacy Commissioner (see Resources). If you'd rather view your report online, you can for a fee.

2

Look for errors on your report-correcting errors is the quickest way to start fixing your credit rating in Australia. Contact the lender and the credit reporting agency to explain what the error is. Your credit report will be amended in about a week. If you are not satisfied with the response you can make a complaint. There are two official organizations that you can complain to in Australia: the Credit Ombudsman Service or the Financial Ombudsman Service (see Resources).

3

Pay as much as you can on your credit cards, and make payments on time. Reducing the amount owed on each credit card to less than 50 percent of your limit will help fix your credit rating. Your payment history and available credit limits with Australian lenders will be shown on your report. You'll be able to identify to which lenders you've missed payments or made late payments.

4

Use your credit cards regularly, but wisely. A dormant credit card will result in a low credit score, but stop using cards if you're above 50 percent of your credit limit.

5

Pay your bills for electricity, water and telephone on time. Australian utility companies report to credit reporting agencies.

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Who Can Help Me Raise My Credit Score?

A business may claim it can raise your credit score, but these claims are often false. Learning how to spot credit repair scams can save you hundreds of dollars, as can learning to repair your credit score yourself.

Signs of a Scam

A legitimate credit repair company will never make outstanding claims about its ability to raise your credit score, according to the Federal Trade Commission. If a company claims it can fix any type of credit problem, it's likely a scam. Avoid any company that encourages you to engage in illegal activity, such as falsifying your social security number or contesting true information on your credit report. Also avoid any company that requests money from you before providing any service -- that is against the Credit Repair Organizations Act -- or that doesn't advise you on how to repair your credit for free.

Investigating the Business

If you have doubts about a business, research it through the Better Business Bureau, BBB, which assigns letter grades to businesses based on customer reviews. The BBB explains the reason for the grade it gives any company, such as failure to provide service as advertised or refusing to give refunds, for example. Enter a credit repair company's name or contact information in the search on the BBB website to find out more about its history with customers.

Checking Your Credit Score

Before deciding that you need to repair your credit, find out your current credit score. As you open and close credit accounts, accumulate and pay off debt, your credit score fluctuates, so the credit score you had when you applied for loans three years ago may not be the same score you have now. Request your credit score from one of the three major credit reporting agencies: TransUnion, Equifax or Experian. You can keep track of your score for as low as $14.95 per month, as of 2011, depending on which agency you choose. If you find any mistakes on your credit report, contact the credit reporting agency about it immediately as it may affect your score.

Raising Your Credit Score

There is no quick way to raise your credit score, but there are sure ways to raise it yourself for free. Since your payment history makes up more than one third of your credit score, always pay bills on time. Write the due dates on a calendar, sign up for a reminder service through the creditor or do both. Pay off your debts, but keep credit accounts open after you pay them off to increase the amount of credit you have relative to debt. These actions may take as many as seven years to affect your score, but they are more reliable than many credit repair schemes.

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Does Small Claims Court Affect Your Credit Score?

Going to small claims court does not mean the courts will enforce the judgment against you, but it almost always guarantees to lower your credit score. Small court claims are a matter of public knowledge, which means that the credit rating bureaus can find out. Negotiating with creditors before the situations require legal action could resolve the debt and save your credit rating.

Identification

A small claims judgment will affect your credit score because the major credit rating agencies collect public information from federal and local governments, according to Experian. Since a small claims judgment can affect your ability to repay debt, it is factored into your FICO score.

Effects

When a dispute gets to any civil court, it is a sign of a debtor's refusal to pay -- a serious black mark in the lending industry. Judgments impact your FICO score almost much as filing bankruptcy because both show a lack of financial planning. Expect a judgment to drastically cut your credit score, sometimes by 100 points or more.

Time Frame

After seven years, the credit rating agencies cannot report a small claims judgment, according to the Fair Isaac Corporation. Tax liens will stay on your credit report indefinitely until resolved. In New York, all court judgments remain on your credit for five years after successful repayment.

Tip

The Fair Isaac Corporation recommends contacting lenders and negotiating your debt payment schedule rather than ignoring it. Most lenders will try to work out a new payment plan because it is usually cheaper to deal with the debtor himself than pay court fees. The actions that lead up to a small claims case, such as late payments, could have a further negative impact on your credit score.

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Can Getting Turned Down for Credit Lower Your Credit Rating?

Your credit score is an important part of your financial health. Your credit score determines the difference between a high interest rate or a low one, or whether you can get credit at all. It is important that you pay close attention to your credit score and be careful about how you handle the credit you already have.

Credit Score

Your credit score is a three-digit number used to determine your creditworthiness.This number is also referred to as your FICO score. According to the Consumer Federation of America, credit scores range from a high of 850 to a low of 300. Your score is based on factors such as payment history, the amount of credit you have, your employment history, the number of new inquiries for credit and your total amount of debt. Late payments, charge-offs, bankruptcies and late mortgage or rent payments all have a negative impact on your credit score. On the positive side, making timely payments, managing your credit card balances and keeping your rent or mortgage current maintain or improve your credit score.

Credit Agencies

Three credit reporting agencies, Experian, TransUnion and Equifax, calculate your credit score. Each agency maintains a file on anyone who has a credit history. It is possible for your credit score to vary among agencies, because not every business with whom you have an account reports to all three agencies. For example, Equifax and TransUnion might have your mortgage and car note, but not your student loans, whereas Experian could have your student loans and credit cards. All three agencies jointly operate the website annualcreditreport.com as part of the Fair and Accurate Credit Transactions Act, legislation that entitles you to receive a free copy of your credit report each year from each agency.

Credit Inquiries

Each time you apply for credit, the potential creditor runs your credit report. This is called a credit inquiry. Inquiries have a negative impact on your credit score, lowering it one or two points for each kind of inquiry. For example, if you apply for a credit card, a mortgage and a car loan at the same time, each of the inquiries will deduct points from your FICO score. Whether you are approved or denied credit is not a factor on your credit score; the inquiries cause the lowering of your credit score. However, if you apply for a car loan from three different places, this only counts as one inquiry, because, although there are three inquiries, they are for the same type of credit.

Avoiding Negative Impact

All inquiries for the same type of credit made within 30 days are lumped together as one inquiry. So, if you plan to apply for several types of credit, either complete them all within the same 30 days and take the total hit once, or spread the inquiries out so each inquiry is in a different 30-day period. According to the MyFICO website, if your credit score is good, the impact of the inquiries will be less than if you have blemished or damaged credit. Also, if you are denied credit for any reason, you are entitled to a free copy of your credit report. This does not include the free report you are entitled to under the Fair and Accurate Credit Transactions Act.

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What to Do to Fix Your Credit

The credit data in your TransUnion, Experian and Equifax reports is reviewed by banks, loan companies, landlords, insurers and human resources departments, according to MSN Money writer Liz Weston. Bad credit needs fixing to give you maximum access to loans, credit cards, housing, insurance and jobs. Some strategies take time, while others improve your credit records within a month or two.

Catch Up Payments

Late payments hurt your credit every month if you do not catch them up. Clear up the past due balances on your credit cards, loans and other bills as soon as possible, even if it means cutting little treats out of your budget. Thirty-five percent of your credit score depends on how promptly you pay, according to Fair Isaac Corp.'s MyFICO scoring site, so sacrificing restaurant meals, a new shirt or fancy coffees to get your bills current pays big dividends in fixing your credit.

Prevent Delinquencies

Set up automatic payments on as many bills as possible once you get all your accounts caught up. Every payment made by the deadline improves your credit rating, and your credit score goes up as you establish a good record. Automatic withdrawals prevent late payments that would otherwise sabotage your credit fixing efforts, according to Weston.

Pay Down Debts

Weston advises that paying a significant amount of money on your highest bills is a fast credit fix if you can afford it. Paying down a big debt can make a difference in your credit score in just 30 days. Get the same effect over time by paying more than the minimum due on your credit cards if you cannot pay the whole balance at once. The Motley Fool website recommends putting the most money on your highest-interest rate credit card until it is paid off, then redirecting the extra funds to the next highest interest card.

Fix Mistakes

Credit report mistakes may involve bad data that makes a positive account look negative or a small error in an otherwise accurate negative entry. You can dispute either type of error with the Equifax, TransUnion and Experian credit bureaus, which forces them to remove the entire entry or try to verify it with the information source. The Divorcenet website advises that the bureaus often erase disputed material immediately if they are too busy to pursue the complaint, and often they never get a response to their validation requests, so your credit reports are improved through elimination of the negative data. This is a fast fix because the credit bureaus only get 30 days to conduct dispute investigations.

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Definition of a Credit Reporting Agency

Credit reporting agencies provide information regarding a person's credit history and ability to make payments on time. All types of payments, including those involving utilities, cars, banking, department store credit cards and housing, are reported to the credit agencies. In addition, personal and health information, including medical history, insurance information, foreclosures, bankruptcies and even criminal information, is found in credit histories.

Credit Application Process

When a consumer applies for credit, such as applying for a gas card or a credit card, identifying information, including the applicant's Social Security number, is sent to the credit reporting agency. The agency, in turn, replies back with a credit history of the applicant. The company then determines the credit worth of the individual and makes a final decision on whether to deny or approve the application.

Consumer Rights

According to information provided by the Federal Deposit Insurance Company (FDIC), consumers have a right to request a free credit report once every 12 months. This information can be obtained by contacting:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
877-322-8228
annualcreditreport.com

The FDIC emphasizes that consumers should not contact the three major credit reporting companies individually. It is important to review credit reports on a yearly basis to correct any misinformation and to safeguard against identity theft.

National Agencies

The three main national credit reporting agencies, Equifax, Experian and TransUnion, use different criteria to determine credit scores. Each agency maintains its own rating standards.

Local Agencies

Local credit agencies, found through online searches, also report information used in the compilation of credit scores.

Disputes

If a consumer finds incorrect information in his credit report, he may go to the Federal Trade Commission website to contest it and have it removed. This process may take 30 to 60 days. All disputes must be in writing, whether they reference incorrect information or an item dispute.

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How to Suppress Something on a Credit Report

Credit reports contain a wealth of information. Potentially harmful information, such as a slow payment history, a repossessed car or a charged-off loan, can make lenders and insurers avoid doing business with you because they see you as a high risk. To minimize these problems, you can suppress some negative information. You won't be able to suppress accurate, verifiable items, but you can usually get enough items removed to have a positive effect on your credit score.

Instructions

1

Find grounds to challenge the items on your credit report that you wish to suppress. You can legally suppress them if you find inaccuracies in them. The Credit Infocenter says there can be many errors beyond the obvious. Look beyond wrong payment dates and account numbers. You might find a wrong opening date, high balance, status, charge-off date or lender name. This applies to current accounts as well as charged-off items and repossessions. They can all be suppressed if they cannot be verified by the credit bureau.

2

Tell the credit bureaus in writing which items you want suppressed and why. The Federal Trade Commission (FTC) says to send a certified letter instead of using the bureaus' online forms. Be very clear and specific, as the bureaus are not required to do an investigation if they think you are making groundless challenges. If your disputes seem to have merit, they must investigate them and respond within 30 days. The items must be suppressed if the credit bureaus cannot prove the challenged information is accurate.

3

Notify the original lenders that you want them to stop reporting the items to the credit bureaus if the bureaus themselves will not suppress them. If the credit bureaus say they have validated negative items, you are entitled by law to demand proof from the original creditors. If the creditors cannot provide proof, they must stop reporting the items, which means the items will stop showing up on your credit reports.

4

Send a statement to the credit bureaus explaining why you think certain items should be suppressed. Ask that your statement be included anytime a creditor, insurance company or employer orders your report.

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What Can I Dispute on My Credit Report?

You can dispute virtually anything on your credit report, although it is unlikely you could eliminate all negative items on your credit report by disputing them all. You probably do not want to dispute everything on a credit report just to see whether you can get the credit bureaus to remove any of them, because disputing too many items could allow the credit agencies to ignore all claims, even legitimate ones.

Identification

You can only dispute legitimate errors on your credit report. Disputing correct negative items seldom results in their removal, and agencies might view this action as an attempt beat the the system by giving the agencies too many items to verify within the 30-day limit. The credit bureaus can legally ignore frivolous disputes, according to the Federal Trade Commission.

Considerations

Do not avoid initiating a dispute simply because it seems like a small error or could appear frivolous, because mistakes often happen in credit reporting. Errors can include anything from a bankruptcy that does not belong to you to an account with the incorrect balance. The key to winning a disputes lies in your evidence. If you can back up your claim with evidence, such as bank statements, you have a chance to win your case.

Dispute Them All at Once?

Disputing multiple errors on your credit report simultaneously may seem to be the most efficient way to approach this situation. However, the Credit Repair website suggests tackling errors one at a time to avoid swamping the bureaus with disputes. You also can devote more time and space to detailing your side in the dispute when you focus on a single error, which could achieve better results.

Tips

While certified letters ensure the credit bureaus receive your dispute claim, online disputes offer the fastest communication. Also, contacting creditors to report correct information could further expedite the dispute process, but it is not necessary. On the other hand, it is often easier to have a creditor correct information he reports erroneously than to go through the credit agencies, which may require the creditor to verify the data anyway.

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What Is the Difference Between Credit Bureaus?

Because the three major credit-reporting agencies -- Experian, Equifax and TransUnion -- collect different information, the credit score you receive from each one may vary slightly. The information that each reporting agency has can differ, as not all lenders and creditors report to all three credit bureaus. In addition, each credit bureau uses a different scoring model to calculate a consumer's credit score. Credit reporting agencies also analyze and present data differently.

Experian

Like the other two major credit bureaus, Experian uses its own version of the FICO scoring method to calculate a consumer's credit score. FICO scores are not the only scores credit bureaus use, but they are the scores to which lenders refer most often. Other than any differences in data contained in the bureau's credit report, Experian uses the Experian/Fair Isaac Risk Model to come up with a score. Experian scores range from 330 to 830. Although the numbers may differ somewhat from other scoring models, they indicate similar levels of risk. A credit report generated by Experian shows when each account listed in your credit file is scheduled to come off your credit report.

Equifax

Equifax is the only credit-reporting agency that summarizes open and closed accounts separately on your credit report. This makes it easier to identify specific accounts you might want to check. The other two credit bureaus list all your accounts together in alphabetical order. Equifax also allows you unlimited access to your credit report. Equifax uses the Beacon scoring method. Credit scores fall within a range of 340 to 820.

TransUnion

TransUnion allows consumers to update employment information on their credit report as it changes. Although providing these updates will not affect your credit score, your report will show a potential lender when you were hired and for how long you have worked for a particular employer. The report also lists the status of your accounts as satisfactory or unsatisfactory. TransUnion applies the Empirica scoring method using a formula based on information in your credit file to produce your credit score. The number helps give potential lenders and creditors an idea about how likely you are to repay the debt you owe on time. Empirica credit scores range from 150 to 934.

What a Credit Report Must Include

No matter what other information about you a credit bureau contains, all credit reports are required to include your full name, address, date of birth, current employer and part of your Social Security number. Your report must list any account information pertaining to your payment history that creditors have reported to the credit bureau. A credit report must also show information such as judgments, liens or bankruptcies that are a matter of public record. Each time a creditor or lender pulls your report when you apply for credit, your report must list the inquiry. You also have the right to add a consumer statement to your credit report in the event you still question any information listed in your credit file that a creditor verifies.

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How to Permanently Remove a Security Freeze on Equifax

If you've been a victim of identity theft or if you just want to safeguard your credit report, you can place a freeze on your Equifax file. A freeze will prevent your information from being reported to creditors and other companies. Although a security freeze can help prevent further identity theft or information dissemination to unwanted parties, you may want to lift the freeze once you're sure your information is secure. A security freeze remains on your report until you request that it's lifted.

Instructions

1

Navigate to the Equifax "Place, Temporarily Lift or Permanently Remove a Security Freeze" website.

2

Fill in the personal information requested on the form. For example, you'll need to provide your name and Social Security number.

3

Type the code verification into the "Code Verification" box, then click the "I Accept the Terms of Use" radio button and click "Submit."

4

Click the radio button next to "Permanently Remove a Security Freeze" and then click "Next." To confirm that you want to remove the security freeze, click "Submit."

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Importance of a Credit Report for Employment

Given the increasingly competitive and tight job market, employers generally have little trouble filling open positions and can afford to choose carefully. A credit report reveals far more than simply whether an applicant pays the monthly bills on time, it represents a reliable indicator of responsibility and discipline. Some personal circumstances that negatively affect a credit report can be beyond an individual's control, such as health problems, that should be explained up front.

References

Before the widespread use of credit reports as a reference in themselves, employers engaged in the typical procedure of calling previous employers, confirming college and other training records, and scheduling multiple interviews. Despite ongoing debates about the fairness of this practice, the Society for Human Resource Management believes "there is a compelling public interest in enabling our nation's employers -- whether that employer is in the government or the private sector -- to assess the skills, abilities and work habits of potential hires."

Ideal Job Match

Employers naturally seek applicants who are qualified for the position at hand and also if they will fit well within the company's culture. If a potential employee is incapable of handling his own affairs, that is typically a red flag that must be reasonably explained in the job interview. Further, employees with the stress of severe financial burdens may not be ideal to trust with sensitive internal matters.

Preparation

Job applicants will serve themselves well by doing everything possible in advance of the actual interview. By securing a copy of their credit reports, addressing any items that may be incorrectly reported and being fully prepared to answer the inevitable questions from potential employers, individuals will position themselves for serious consideration. Many explanations are entirely reasonable, such as a medical leave or being laid off from a position for economic reasons despite an exemplary history. There is no reason to be intimidated by such factors, and employers appreciate forthright explanations.

Improvement

Potential employees should begin taking steps to improve their credit scores as soon as possible. Even with a checkered credit history, a solid six months of on-time payments will measurably improve a credit profile. While only time can fully rectify a negative report, employers are typically less concerned with what may have happened years ago, and give more weight to current records.

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When Is an Unlawful Detainer Put on Your Credit Report in Minnesota?

Your ability to obtain new forms of credit depends largely on the information contained within your credit reports. Different companies collect information about your history with credit to create these reports, and any negative information on your report can hurt your chances at getting new credit. In Minnesota and all other states, credit report information, such as unlawful detainer lawsuits, is governed by federal law, though when it appears on your report differs.

Unlawful Detainer

An unlawful detainer is a specific kind of lawsuit, more commonly known as an eviction. If you violate the terms of your lease or do anything else that allows a landlord to evict you, your landlord has to first file an unlawful detainer lawsuit with the court and ask the court's permission to remove you from the property. If the landlord wins the case, you must vacate the property and can be forced to do so by the local law enforcement agency, typically the sheriff's department.

Fair Credit Reporting Act

The Fair Credit Reporting Act, or FCRA, is a federal law that governs the use of credit reports and applies to Minnesota residents. According to the Federal Trade Commission, negative information such as eviction lawsuits must remain on your credit report for seven years. Generally, this means that once a court rules in favor of a landlord in an unlawful detainer actions, known as issuing a judgment, this judgment stays on your report for seven years after a court issues it.

Credit Reporting Agencies

There are three primary consumer credit reporting agencies -- TransUnion, Equifax and Experian. These three companies use various methods to collect consumer credit information and include it on credit reports. The FCRA does make requirements about when a company has to include it on your report. Typically, according to California Tenant Law, credit reporting agencies have employees that search courthouse records for unlawful detainer records and do not rely on landlords to provide eviction records. How and when this information appears on you report differs depending on when the company learns the information.

Credit Report and Credit Score

What effect an unlawful detainer record has on your credit report differs, as well. Different companies use the information on your credit report to determine your credit score, a numerical representation of how much of a risk you represent to a potential lender. A low score means your are risky, while a high score means you are not. Though companies score information differently, an eviction will likely negatively impact your credit score.

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Can High Balances on My Credit Cards Hurt My Credit Score?

Consumers often focus on paying their monthly minimum payment when carrying a high balance can be more damaging to a credit score. If you use most of your credit card limit, you should do what you can to eliminate as much of the balance as possible. You may not be able to avoid the impact of a high credit card balance without paying off any debt.

Identification

A high balance on your credit card damages your credit rating because it leads to a high credit utilization ratio, or percent of credit limit available. You should not use more than 36 percent of your credit limit, and ideally keep credit utilization below 10 percent. Also, a high balance adds debt to your credit history. Amounts owed counts for 30 percent of a credit score, according to the Fair Isaac Corporation.

Other Damage

The FICO scoring system also considers the balance history on your credit cards. Frequently maxing out a credit card or keeping a high balance month to month damages your credit rating. Paying off balances every month tends to raise your credit rating. Creditors report the balance on the billing statement to the credit bureaus, so you must keep your balance low through the entire month.

Considerations

A high credit card balance usually means you cannot afford to pay for your lifestyle. If a sudden disaster strikes, such as unemployment or a sudden medical emergency, your level of debt can become unmanageable if other obligations eat up your disposable income. Missed payments or worse, a charge-off or collection account, can damage your score by more than 100 points.

Tip

Pay as much over the minimum monthly charge as possible each month. Also, call the credit card company about lowering your interest rate. You can cite other credit card offers you receive to gain leverage. You can also ask for a limit increase on your account. A higher credit limit lowers the percent of your limit you use -- assuming you do not make more charges to your account. Ask the creditor if it requires a credit inquiry to consider a limit increase. The damage from a credit inquiry can cost up to five points on your credit rating.

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What Goes Into a Credit Score?

When you apply for a mortgage, rental property, auto loan, credit card and even insurance, your credit score largely determines whether the company in question will do business with you. While multiple credit scoring formulas exist, the FICO score calculated by the Fair Isaac Corporation is the most widely used credit score in the U.S. The better you understand the factors that go into determining your credit rating, the more efficiently you can work toward building better credit.

Account Payments

Each payment you make to your lenders and creditors influences your credit scores. According to the Fair Isaac Corporation's MyFICO.com, each consumer's payment history accounts for 35 percent of his credit score. While timely payments help you increase your credit rating, missed payments will adversely impact your scores for up to seven years. Thus, making on-time payments to your creditors is a crucial part of building the best credit score possible.

Recent Activity

The more recent your activity on an account, the greater its impact on your credit scores. This not only includes recent payments, but recent inquiries by creditors and new accounts you open. Because your recent activity accounts for 10 percent of your credit score, derogatory entries on your credit report have less of a negative impact on your credit rating the longer they sit inactive---allowing you to establish a better credit rating through recent responsible debt management.

Legal Records

Certain legal records about you, such as judgments against you, bankruptcies, tax liens and previous foreclosures, appear on your credit report. Legal records are always detrimental to credit scores. While the Fair Credit Reporting Act limits most negative reports to no longer than seven years on your credit report, certain legal records are an exception to the rule. A judgment, for example, will remain for the amount of time your state allows creditors to enforce judgments and bankruptcies can remain on your credit report for up to 10 years.

Debt-to-Credit Ratio

The amount you owe your creditors helps determine how capable you are of repaying debts. High debts indicate a risk of financial instability and adversely impact your credit rating. The amount you owe your creditors accounts for 30 percent of your credit score and your debt-to-credit ratio is a significant part of this calculation.

Debt-to-credit ratios only apply to revolving debts, such as credit card debts, and represent the percentage of your credit line still available for use. Keeping your balances low is crucial to preserving a positive credit rating. CNN Money recommends carrying a balance of no more than 30 percent of your credit limit.

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How to Get a Credit Builder Loan

A credit builder loan can be used by an individual who has a short credit history or no credit history at all. The purpose of the loan is not just to finance a purchase but to begin establishing the borrower's credit history.

Many banks and lenders offer loan programs called "credit builder loans" while others do not specifically name the product. Any time you are taking a loan to build up your credit, you are taking a credit builder loan.

Instructions

1

Check your credit score. AnnualCreditReport.com, a website supported by the major credit bureaus, allows you to check your credit rating once a year for free.

2

Inspect your expanded credit report. Your credit report will list your score, but it will also have a section that explains how the score was arrived at. For example, missed or late payments will be listed. If your report is free of these issues, you may see a negative comment noting your credit score is low because your credit history is too short. This puts you in an ideal position to benefit from a credit builder loan.

3

Contact a lender that offers credit builder loans. Remember, not all lenders will call the loan by this name. Ask the lender if it offers loans for individuals with a short credit history.

4

Provide verification of your permanent address and income. A permanent address is necessary so the lender can find you in case of missed payments. Income is critically important for any borrower without credit. Your income shows the lender you will be able to afford your payments. Proof of income can be provided by a paycheck stub, verification from your employer or a bank statement showing your average monthly account balance.

5

Provide collateral as necessary. Without credit, you may have to put up collateral in order to get a loan. You can use any asset as collateral, including a car, savings account, home or stock certificate.

6

Make your payments on time until the loan is paid off. Because the purpose of this loan is primarily to build credit, don't refinance, consolidate or prepay it. If you do so, you will lose the benefits to your credit rating.

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How to Interpret the Poor & Good Chart for a FICO Credit Score

Fair Issac Corporation, commonly known as FICO, is a publicly traded company that manages and monitors the credit scores of North Americans. FICO scores are used by a variety of financial companies to judge the credit-worthiness of an individual. Due to their importance when applying for loans and mortgages, it is important to know how to interpret the rating chart on a FICO credit report to learn how financial institutions may view your credit risks.

Instructions

1

Order a free credit score report through myFICO, the consumer division of the FICO company. New customers may receive two free credit scores and credit reports the first time they join myFICO. After ordering your score, the company mails you a physical pamphlet detailing your personal credit history. It may take up to 10 business days to receive your package.

2

Find your FICO credit score, printed on the first page of your credit score package. Remember this score, or write it down on another piece of paper.

3

Locate the "Poor, Fair, Good and Excellent" chart on the credit score report. This charge is typically found on Page 3 or Page 4 in the FICO credit score package.

4

Compare your score with the score chart. Individuals with a credit score below 620 are deemed to be of poor standing. Those with a credit score above 780 are seen as having excellent credit. The rest are broken down as fair, good and very good. Your credit standing is judged by where your personal score falls within the chart. The closer you are to the poor end of the chart, the harder it will be to obtain financing or find a low-interest loan.

5

Look below the horizontal credit chart for a pie chart that breaks down how various factors influence your standing. For example, the purple-colored "Amounts Owed" piece of the pie chart constitutes 30 percent of your credit score. This involves such matters as your current debt compared to your credit limit. To increase your credit score, change personal lifestyle and spending habits that fall into each of these categories.

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Will an Authorized User Help Your Credit Score?

Credit card companies that allow authorized user accounts permit current cardholders to add another individual to the account. The authorized user receives a credit card of his own and any purchases he makes are then charged to the primary cardholder's account. Adding an authorized user to your credit card can impact both the user's credit score and, in some cases, your own.

How It Works

Current cardholders do not add authorized users to their credit card accounts to improve their own credit scores. Adding a new user to your credit card does not benefit your credit score in any way. If the credit card company reports your credit card payment history on the authorized user's credit report -- and not all do -- your positive payment history on the card will contribute to the authorized user's overall credit score. In order for your authorized user's credit score to benefit, however, she must be a family member. The FICO credit scoring formula ignores authorized user accounts belonging to non-family members.

Potential Risks

As the primary cardholder, you assume a considerable risk by adding an authorized user to your account. The authorized user receives a card of his own directly tied to your account and you -- not him -- are legally responsible for paying any charges he incurs.

If you cannot afford to pay off your authorized user's purchases, your credit card company will report the missed payments to the credit bureaus. Your credit report and that of your authorized user will then reflect the derogatory information and your credit scores will suffer.

Additional Damage

Even if you can afford to pay the minimum payment on your credit card account, the purchases your authorized user makes can still lower your credit score by increasing your credit utilization. The debt you owe to your credit card company compared to your available spending limit makes up your credit utilization ratio. The lower the margin between the two, the worse your credit suffers. Thus, by making high purchases on your credit card account, the authorized user can inadvertently hurt both of your credit scores.

Considerations

While you face credit risks by adding an authorized user to your credit card account, the authorized user also faces potential credit damage. If you miss a payment, default on the card or include the card in a bankruptcy petition, evidence of your inability to pay will appear on the authorized user's credit report and factor into her credit score.

Removing Authorized Users

If you know you cannot keep up with your credit card payments and want to prevent the user from suffering credit damage or your authorized user is spending more on your credit account than you can comfortably pay, you can protect both your credit rating and his by removing the user from your account. Because the account belongs to you, you can remove an authorized user at any time by contacting your credit card company.

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How to Dispute Negative Accounts in My Credit Report

Negative credit report accounts include things such as loans and credit cards with many late or missed payments, or accounts that went unpaid so long they were charged off by the lenders. Other harmful things include repossessed cars, foreclosed houses and legal judgments. These entries look bad when you apply for credit and lenders check your records. This type of negative mark usually stays on your credit reports for seven years, but disputing them sometimes gets them erased earlier, according to the the Divorcenet legal information site.

Instructions

1

Find all the negative items on your Experian, Equifax and TransUnion credit reports. The three credit bureaus are separate entities, so their information sometimes differs. The Federal Trade Commission, or FTC, mandates that you can get a free copy of each report annually through a special website (see Resources section). If you already received no-cost copies earlier in the year, you can pay the bureaus for their latest reports, or you can wait until you are eligible again for free reports. Highlight every entry that is hurting your credit rating.

2

Compare the negative items to your records and circle any inconsistencies. Creditors sometimes misspell names or report the wrong dates, credit limits or account balances to the credit bureaus. All of these things give you valid grounds for initiating disputes.

3

Compose detailed letters to each credit bureau, citing the mistakes and asking for an investigation. Experian, Equifax and TransUnion all accept electronic disputes through their websites, but the FTC states that it is better to put things in writing and to get delivery receipts for the letters.

Photocopy your documentation and enclose copies with each letter to prove that your disputes are valid. The bureaus can refuse to investigate if the complaints seem frivolous, Divorcenet cautions.

4

Review the corrected credit report, and dispute any erroneous negative results you receive from the credit bureaus. The FTC explains that the bureaus are given 30 days for their investigations, so they typically respond in about 45 days. The bureaus contact the creditors who are reporting the disputed information and ask for verification. They remove the related entries if there is no response, or if some of the creditors cannot properly validate the accounts.

5

Write to creditors who validate information that you still believe is incorrect on negative accounts, the FTC recommends. Ask them to stop reporting the account to the credit bureaus.

6

Send a consumer statement to Experian, Equifax and TransUnion for any negative items that contain mistakes if the bureaus and creditors refuse to remove such items. The Federal Reserve Bank of San Francisco explains that the statement should be less than 100 words. The statement goes to everyone who orders credit report copies.

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Ways to Restore Credit & FICO Score

Credit scores are calculated by the three major credit bureaus-- Experian, Equifax and TransUnion--using a formula developed by the Fair Isaac Corporation. This score is intended to give lenders an estimate of how risky of an investment you are if they were to give you a loan. Credit scores take time to build so there is no overnight fix for a low score. However, there are a number of steps that you can take to start improving your score in the future.

Improve Your Payment Record

The single biggest component of your FICO score is your payment history, which makes up 35 percent of the score. Your payment history takes into account how well you have met your obligation to pay your bills over time. First, get any accounts that are delinquent current. The longer these accounts remain past due the lower your score will go. If you cannot make the minimum payments, contact your creditors and ask if it is possible to adjust your payments. Many credits will be willing to work with you because if you go bankrupt or default on their account, they will receive nothing. Finally, do everything in your power to make payments on time in the future. More recent payments are weighted more heavily than payments from several years in the past so your score can improve as soon as you start making on-time payments.

Curb Applications for New Credit

Each time you apply for new credit, an inquiry is recorded on your credit report. These inquires lower your score, more so for people with shorter credit histories than those with longer credit histories. Sometimes it may be worth it to apply for a consolidation loan that will allow you to pay a lower interest rate than you would if the balances remained on your credit cards, but simply shifting debt from account to account will not raise your score.

Do Not Close Old Accounts

Closing old accounts will not remove negative information associated with those accounts. Most information, positive or negative, stays on your credit report for seven years except for personal bankruptcies, which remain on your report for 10 years. Closing your account can also have a negative effect on your score because it is one less account on which you are making on-time payments and it reduces the amount of available credit you have. In order to close an account, you must have paid off the balance. For the sake of calculating credit scores, if you have no balance to pay, you are still reported as being current on that account, which helps your credit score. Also, the amounts owed section of your credit card takes into account the percentage of available credit that you are using. For example, if you have four credit cards each with a credit limit of $2,000, your total credit limit is $8,000. If you have balances of $1,500 on three of the cards, you would be using just over 56 percent of your credit limit. However, if you were to close the account that you are not using, your total credit limit would drop to $6,000 and your use would rise to 75 percent.

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What Does It Do to Your Credit if You Have a Boat Repossessed?

If you take out a loan and dont make payments as agreed, expect the bank to pursue the item you used as collateral for the loan. In the case of a boat loan, this means that the bank will send an individual to repossess your boat. The bank will then report the repossession to the credit bureaus. Thus, not only will you lose your watercraft, your damaged credit may make it difficult to qualify for another boat loan when your financial situation improves.

Boat Seizure

Depending on the way your boat loan is structured, the repossession may appear on your credit report as either a repossession similar to a car repossession or a foreclosure. This is because boat owners with houseboats have the option to take out a mortgage on their boats rather than a mere loan. Regardless of whether your credit report reflects a repossession or a foreclosure, losing collateral to a lender due to your inability to make payments reflects poorly on your creditworthiness and does considerable damage to your credit score.

Credit Damage

The degree of credit damage youll suffer after a boat repossession depends on a variety of factors such as how the lender reports the repossession and whether the other accounts on your credit report are in good standing. In general, the better your credit score, the greater the damage it will suffer after a repossession or foreclosure.

Considerations

When banks seize cars and homes due to unpaid loans, they attempt to sell the collateral and recover the debt. The same is true of boats. If the bank recovers the remainder of your loan through the boat sale, you likely wont hear from them again. If the sale does not satisfy your outstanding loan balance, you are still responsible for paying off your debt. If you do not, the bank can turn your debt over to a collection agency damaging your credit rating even further.

Both a collection agency and the original lending institution have the right to sue you for the unpaid balance of your boat loan. State laws vary regarding a creditors rights after a lawsuit, but in most states creditors can garnish your wages and seize personal property such as your bank accounts, to recover the unpaid debt. Your credit report will also reflect a legal judgment that has an added negative effect on your credit score.

Time Frame

Your boats seizure will not haunt your credit file forever. The Fair Credit Reporting Act notes that credit bureaus must delete information pertaining to repossessions and foreclosures after seven years and 180 days. An exception to this rule may apply if your lender sued you and obtained a judgment for the unpaid balance of your boat loan. If your state gives lenders more than seven years to collect a judgment, the judgment can remain a derogatory part of your credit file for the full enforcement period in your state.

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How Do I Build a Credit Scorecard?

Your credit scorecard is a simple self-made record of your credit scores, taken from reports produced by credit reporting bureaus. To start building your credit scorecard you need to get your credit score regularly. Building your own credit scorecard is a good way to monitor movements and to see areas where you could raise your credit score. Your credit score is used by lenders to determine your suitability for lines of credit. The higher your score, the better your chances of obtaining credit, and lower interest rates on loans. Building your credit score to high levels can take some time, but so long as you follow a few guidelines, you can improve your score in a few months.

Instructions

1

Get your credit score from any of the three credit reporting bureaus: Equifax, TransUnion or Experian. You need to pay to see your credit score, but it's simple to apply, and you get to see your score instantly so you can start to build your credit scorecard.

2

Set up your credit scorecard on paper or make a template on your computer. Make several columns. Head up the first with the name of the lender, and the second with the date of your score. Leave subsequent headings blank until you obtain a new score report.

3

Check through your credit score. A total credit score runs from 300 to 850, calculated from information from lenders. Scores of less than 500 are considered poor and can result in credit being declined. Scores of 500 to 650 are average, and scores above 650 are good. If your score is higher than 750 it is excellent, and nothing needs to be done to build your credit scorecard.

4

Check for errors, as these can be rectified quickly and will help build your credit score. Report errors to the credit reporting bureau as soon as possible. Errors should be rectified within 30 days.

Check areas in which your scorecard is low. Areas that lower your scorecard include inactive credit cards. If you use all your credit cards regularly and sensibly you, build your credit scorecard.

5

List all your lenders in the first column. Write or enter your credit score attained in column two next to the appropriate lender. Add your scores and total at the bottom of the column. This should equal the credit score on your report.

6

Build your credit scorecard by getting your credit scores at regular intervals. Each time you get a new credit score, complete another column on your scorecard. You will be able to clearly see changes and monitor improvements.

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What Determines a Beacon Score?

Beacon is the trade name that the Equifax credit reporting agency uses for the FICO credit scores it provides. The other credit bureaus use the FICO scoring system as well, although TransUnion markets it under the trade name "Empirica." Beacon scores provide an estimate of the credit risk that borrowers present based on a mathematical model of the information on their credit histories.

Prompt Payments

A consumer's record of on-time bill payments makes up 35 percent of a Beacon score. Payments more than 30 days late seriously lower the score.

Indebtedness

Total debt determines another 30 percent of the Beacon score. The amount of debt is compared to income, and excessive indebtedness results in a lower score.

Debt Type

Unsecured debt presents more risk to lenders. For this reason, excess credit card or other unsecured debt will lower the Beacon score. It accounts for 10 percent of a Beacon score.

Volatility

Frequently closing credit accounts and applying for new accounts is an indicator of increased risk and may reduce a Beacon score as much as 10 percent.

Time Frame

The length of a consumer's history of using credit counts for 15 percent of the score. Good (or bad) use of credit over the long term is a strong indicator of future behavior.

Negative Events

Foreclosure, a defaulted debt obligation, and tax liens lower Beacon scores. Bankruptcy also hurts but may be offset because much of the information on a credit history is expunged after passage of time.

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How to Increase a Credit Score for Secured Bank Loans

Today, more than ever, a good credit score is a must if you want to get a secured bank loan. Banks are tightening up their standards and are less willing to loan money, even to people with good credit. To get the best interest rate and to increase your chances of being able to buy that house or car you've been looking at, you must ensure your credit score is as high as possible.

Instructions

Credit report

1

Contact Experian, Trans Union and Equifax and get your credit report. Review the information. Dispute information that is incorrect (links to the major reporting agencies are included in the Reference section).

2

Pay down your credit cards and, when you do, devote the most resources to the cards that can get paid down quickly. Contact the credit card company and ask them to increase your line of credit, even if you won't use the additional credit, because your score is adversely affected if you always use all of the credit available to you, even if you pay it off each month.

3

Send a goodwill letter to creditors with whom you have had a couple of late payments, if you otherwise have a good record. Ask them to erase the negative listings.

4

Demand that the credit reporting agencies remove accounts not listed as "paid in full" or "current" when they are, late payments or collections that truly aren't yours, accounts discharged in bankruptcy listed as unpaid, late payments from over seven years ago or accounts listed as "closed by credit grantor" when they weren't.

5

Negotiate with collection agencies that hold smaller debts (under $500) by getting them to agree to delete the records from your credit reports if you pay them in full. Ask for this in writing and pay with a money order.

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How to Stop Checks to Your Credit Rating Without Your Permission

You have found some disquieting entries on your credit reports, and when you followed up with the credit reporting agencies, you learned that different companies had pulled your credit without your knowledge or permission. Each inquiry lowers your credit score. Aside from this effect, if your private credit information is widely spread, it makes it easier for someone to steal your identity. You do have legal recourse to prevent unwanted credit checks.

Instructions

1

Educate yourself regarding applicable credit laws in your state. You should be able to find this information on the state attorney general's website for your state.

2

Order current copies of your credit report from all three credit reporting agencies---TransUnion, Experian and Equifax. You are eligible for one free credit report annually from each agency.

3

Contact all three credit reporting agencies, either by toll-free number or by letter, and request that a freeze be put on your credit report. Once this freeze is in effect, only certain people or agencies may access your credit report without your permission. These include companies with which you already have credit, persons who already have permission from you, government agencies, potential employers and anyone who is monitoring your credit with your permission.

4

Let the credit reporting agencies know if you've been the victim of identity theft. If so, they will place the freeze on your credit report at no charge to you. If you have not been the victim of identity theft, these agencies are permitted to charge a fee for placing the freeze on your history.

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Information on Credit Agencies

From an idea conceived in the mid-19th century by a Calvinist East Coast merchant with an aversion to credit rooted in biblical principles, credit agencies have grown to be so integral a part of life in the United States that where you're able to live -- or even work -- may hinge on the information a credit agency has gathered about you.

Origin

The credit agency concept is attributed to Lewis Tappan, a devoutly religious Philadelphia and Boston businessman who began extending credit to his customers in the mid-1830s to keep his then-struggling mercantile business afloat. To help him assess the appropriateness of his decisions, Tappan gathered and evaluated information on his customers' character and creditworthiness. Other merchants eventually sought his advice and, in 1841, Tappan founded the Mercantile Agency, which, through a series of transfers, mergers and name changes, is still in business today.

Function

Credit agencies are NOT decision-makers.

Credit reporting agencies do not make decisions to extend or deny credit. Instead, they collect a variety of consumer data, including your employment and bill-paying histories, the types of credit you use and the amounts you have previously borrowed. The credit agency then applies a number of formulas and analytics to render a score that prospective creditors can access, for a fee, to evaluate the potential risk of extending new or additional credit to you.

Evolution

Once used primarily by merchants, credit reporting agencies have expanded into consumer intelligence businesses that now also compile information for a wide variety of users, including direct marketers, landlords, insurance companies, employers and others, to help them make decisions ranging from the amount of your auto insurance premium to whether or not to extend to you an employment offer or accept you as a tenant. According to Reference for Business, there are more than 1,000 credit agencies across the country. Most, however, are either directly owned or contracted by one of the three dominant U.S. consumer credit reporting agencies.

Regulation

Consumer credit reporting agencies are regulated by the U.S. Federal Trade Commission, the government bureau that enforces the provisions and subsequent amendments of the Fair Credit Reporting Act of 1971, which, according to the FTC, promote "the accuracy, fairness and privacy of information in the files of consumer reporting agencies." Passage of the Fair and Accurate Credit Transaction Act of 2003 places new responsibilities on credit agencies --- including mandating them to better help consumers fight the growing incidence of identity theft --- and also subjects them to regulation by financial bureaus such as the Federal Reserve.

The Future

As credit agency roles expand, new legislation that gives you increased access to the information in your credit file is prompting the development of new products that make it easier for you, as a credit consumer, to interpret your credit score. Additionally, increases in the number of global credit consumers will continue to open new markets for credit reporting bureaus, as well as produce innovations in their analytical models.

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What Is the Best Way to Increase a FICO Score?

FICO is short for Fair Isaac Corp. All three credit bureaus, including Equifax, TransUnion and Experian, use the FICO scoring method for determining a credit score. A FICO score ranges between 300 and 850. A higher credit score indicates stronger creditworthiness, opening the door to lower interest rates and more financing opportunities. If you want to increase your FICO score, focus on improving the several different components that make up the score.

Instructions

1

Make credit obligation payments on time. Payment history is the largest category of the FICO score, making up 35 percent of the total score. If you have accounts that are delinquent or facing collection activity, your FICO score will experience a substantial drop.

2

Pay down revolving debt. The debt category accounts for 30 percent of the FICO score. Revolving debt (such as credit cards) has the largest impact on the category.

3

Keep older accounts open. Don't close out old accounts after making the last payment. Credit history makes up 15 percent of the FICO score. Keeping these accounts open with a zero balance will increase the score.

4

Apply for credit slowly. Opening several accounts within a short period of time will negatively affect the FICO score. This category accounts for 10 percent of the score. Instead, open credit slowly, and only when necessary.

5

Use different types of credit. A higher FICO score is given to consumers who use installment loans (cars, mortgages and personal loans) and revolving credit (credit cards and equity lines). Credit bureaus want to see consumers act responsibly with both types of credit. This makes up 10 percent of the score.

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Who Reports to a Credit Bureau?

A credit bureau is an organization that tracks the credit histories of individuals. The three major credit reporting agencies are TransUnion, Equifax and Experian. A credit report includes a person's identifying information, account history, public records and credit history inquiries when a person applies for credit accounts. Businesses use credit reports as a basis for lending money and extending credit. It's good to know who reports information to the credit bureaus as you build your credit for future purchases and financing.

Credit Cards

Cards such as Visa, MasterCard, American Express, retailers and gas credit cards report individual account information every 30 days. They show the date an account opened, current balance at time of reporting and the credit limit. Credit cards can quickly build up your credit or damage it depending on your payment history. Companies will report a payment late in increments of 30, 60, 90 and 120 days, which all have a negative impact of the overall credit score.

Personal and Car Loans

Car loans build your credit.

Personal and car loan lenders report to the credit bureaus on a monthly basis. These lenders provide installment loans with a fixed payment, interest rate and term. These companies report to the credit bureaus the amount advanced, current balance, payment, name of finance company, date opened and payment status. A personal loan can be used for a variety of things such as vacations, bill consolidation, home repair or emergencies.

Mortgages

Mortgage companies also report to the credit bureau if you are on the actual loan. If you rent or are just on the deed to the mortgage, that information will not be reported. A private mortgage between two individuals will not generally report to the credit bureau. A lender of a private mortgage may provide the private mortgage information with proper documentation on payment history to the credit bureaus; in certain situations, the the credit bureaus will report the information, but you'd want to make sure the lender continues to report every 60 days.

Bankruptcies, Judgments, Liens and Medical Bills

Bad collections and bankruptcies affect credit reports.

Courts report bankruptcies and judgments to the credit bureaus. Bankruptcies take up to 10 years to disappear from a credit report, which adversely affects credit scores. A discharged chapter 13 will remain on a credit report seven years from the date filed. Judgments are the result of a lawsuit due to unpaid debt. A judgment will show up for seven years from the date filed whether it has been paid. Tax liens that have been paid will report for seven years from the date paid; unpaid will show indefinitely. Medical bills will also find their way on a credit report when not paid.

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Chapter 7 Time Limit

Chapter 7 could be a way to get out of an unmanageable debt burden and potentially improve your credit score. Most of the time, bankruptcy destroys a credit score, but the national bureaus can only report a Chapter 7 for a certain amount of time. Since Chapter 7 lets borrowers off the hook for most debts, the reporting time limit for it is longer than for any other type of bankruptcy.

Identification

The national credit bureaus report a Chapter 7 bankruptcy for 10 years, according to Experian. A common misconception is that the bureaus report bankruptcies from the date the bankruptcy court finalizes the case. Actually, the reporting time period starts from the date that you file bankruptcy. Until the credit reporting period ends, the bureaus report any accounts included in the Chapter 7 bankruptcy.

Dismissed Bankruptcy

You can dismiss a bankruptcy at any time by filing a "motion to dismiss" or the bankruptcy court might file a motion to dismiss if it feels you violated the court's rules, such as not taking the credit counseling session. While a dismissed bankruptcy can be a sign of a good borrower, such as one who wants to pay back debts rather than seek discharge, the credit bureaus still report dismissed Chapter 7 bankruptcies for 10 years. Other dismissed bankruptcies, such as Chapter 13, usually have a shorter reporting period.

Benefits

Bankruptcy might not be all that bad for your credit score. Bankruptcy could even improve your credit score, due to how the bureaus compare borrowers. Instead of comparing bankrupt consumers to all borrowers, the bureaus only compare them to other bankrupt individuals. Thus, after rebuilding your score, your score might drop after the bankruptcy leaves your credit report. Also, the bankruptcy case probably lowers your debt load significantly and eliminates the history on the accounts included in the bankruptcy -- which might contain negative information that does more harm collectively than a single bankruptcy.

Tip

You should always explore every option before filing bankruptcy. Most creditors will offer some assistance to help you avoid becoming totally insolvent. A licensed, nonprofit credit counselor should be your first stop. The counselor might be able to talk creditors into a lower monthly payment or restructure the terms of your loan so you can catch up on bills.

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