What Are the Three Main Credit Bureaus?

Credit bureaus collect data about people and companies regarding how well they pay their bills. The credit reporting concept started in the mid-1800s but was a very local process and functioned as more of a warning against lending money or selling goods on credit to individuals who had a history of not paying in a timely manner. However, around World War I, people were able to move more easily and the need for national reporting agencies started to be come apparent. Today, the three main credit bureaus are Experian, Equifax and TransUnion. Though there are numerous smaller regional credit bureaus, most of them are associated with one of the three larger bureaus.

Equifax

Equifax is the oldest of the main credit bureaus; it started in 1899 under the name Retail Credit Company. The name was changed to Equifax in 1975. Equifax started out as a local company in Georgia but saw the potential for a national service. The company was the motivation for increasing regulation of the credit reporting industry in the 1960s and 1970s because of its willingness to freely distribute information about consumers. Today, Equifax is the largest of the three main credit bureaus.

TransUnion

TransUnion was opened in 1969 as part of the Union Tank Car Company. It started its credit reporting business in earnest when it acquired the Credit Bureau of Cook County that same year. The company continued to expand and by 1988 the company covered the entire United States. As of 2009, the company was active in 25 countries.

Experian

Experian was founded in England in 1980 as part of CCN Systems. The company became a national credit bureau in the United States in 1996 when it purchased TRW Information Systems. As of 2009, Experian has branches in 38 companies and clients in 65 countries.

Other Services

In addition to providing credit reports and scores for individuals, the three main credit bureaus also offer credit information about businesses. This service is particularly useful for companies that engage in business-to-business transactions because it helps them to determine which companies it can afford to sell to on credit. They also offer consulting services to help companies come up with better billing methods to ensure on-time payments.

Consumer Rights

Credit reporting used to be a tightly held secret among credit agencies because they feared that if consumers could see their credit reports and their scores they would know how they were judged and would be able to modify their behavior just to improve their scores, which could defeat the value of the scoring system. Though the formula for calculating credit scores is still a closely guarded secret, federal laws require that the three credit bureaus give a free credit report to consumers once each year.

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Does Paying Rent Late Bring Your Credit Score Down?

In the past, late rental payments didn't have much effect on an individual's credit rating unless the landlord sent the unpaid rent to collections. In 2011, however, Experian changed its reporting policies to include rental payment information. Because Experian is one of the three major credit bureaus, failing to make your rent payments on time could lower your credit score.

Background

Before Experian's changes, late rental payments only appeared on an individual's credit report if the landlord subscribed to a credit bureau's services, which was typically too expensive for most small management companies or individual property owners. If a landlord did report rental payments, credit bureaus didn't give them the same weight as other debts because rent payments reflect an individual's ability to prepay for services rather than repay a debt.

RentBureau

To accurately report rental payment information, Experian uses information from RentBureau. According to an Experian press release, Experian acquired RentBureau's multifamily division in 2010. RentBureau is the most commonly utilized credit reporting agency among landlords and management companies. It consists of a national network of property companies that collect information about rental payments and report them to the central database each day. Subscribing property managers use the information RentBureau provides to determine a potential tenant's creditworthiness.

Experian

In 2011, Experian began including rental payment data on credit reports. During 2011, Experian will only include positive payment data. However, in 2012, Experian will report negative payment data as well. If a renter is late making his monthly payment, the delinquency will appear on his credit report and may lower his score. At the time of publication, Experian is the only one of the three major credit bureaus that plans to report rental data.

Considerations

Though, at the time of publication, late rental payments only affect Experian credit reports, the other two major credit bureaus may follow suit in the future. Unpaid rent may also appear on any of your credit reports as a collections account if your landlord sells your debt to a collection agency or obtains a judgment against you.

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How to Get A-1 Credit

A higher credit score saves a consumer money in interest rates and help her get better insurance policies as well as secure rental and loan approval. When trying to build a better credit score, some consumers refer to this as obtaining an A-1 credit score. There is even a company called A-1 Credit, whose purpose is to repair the credit scores of its clients. Building higher credit scores involves getting your financial house in order. According to Experian, one of the three major national credit-reporting agencies, most credit scores fall between 600 and 750. A score over 700 indicates good credit management.

Instructions

1

Order your free credit report from each of three nation credit-reporting agencies, Experian, Equifax and TransUnion. You can do this once a year, online at annualcreditreport.com. You actually have three credit scores, one reported by each of these agencies.

2

Study the credit reports and note any inaccurate negative information, and items you need to repair, such as a debt you failed to pay.

3

Contact each of the three credit reporting agencies, using the information obtained on the website where you ordered the reports, and take necessary steps to remove all inaccurate information from your credit reports.

4

Resolve negative information on your report and negotiate with creditors, to remove accurate negative information from your report. Some you may not be able to resolve, yet over time, they will eventually drop from the report.

5

Pay all your bills on time or before the actual due date. Paying just one day late negatively impacts your credit scores.

6

Secure open credit. Having no open credit, such as a credit card or car payment, can hold back your credit scores, as can having too much open credit. You need something on your credit report to demonstrate how you manage open credit.

7

Manage your debt to credit ratio. The object is to have more open credit than debt. For example, if a credit card company approves you for a $2,000 credit limit, it is better for your credit score to only use $500 of the credit, as opposed to $1,900. Using all your available credit indicates you do not manage your credit well.

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How to Get My Credit Score

The three major credit bureaus--Equifax, Experian, and TransUnion--are required by federal law to supply you with one free copy of your credit report each year if you request it. It is a good idea to review your credit report yearly to make certain that there is no erroneous information on your report and to make certain that less-than-flattering credit information is removed or modified when appropriate. Getting your actual credit score is easy, too--and free--as long as you follow certain necessary steps.

Instructions

1

Contact Annual Credit Report online to get all three of your credit reports for free from one source. See the Resources section below for the address. You can request your free credit reports online, order your reports by phone or ask for them through the mail.

2

Sign up for a free email account at a site such as yahoo.com or hotmail.com, an account that you don't intend to be a primary account.

3

Go to Credit Karma and click on the button that says Get Your Free Credit Score. Click on the Credit Karma link in the References section below.

4

Fill out the first page of the simple form to join Credit Karma. Use your free email address; this way if you are spammed with ads later the spam will not fill your primary email account.

5

Confirm your email address. Credit Karma will send an email to the address you provided. Open this email and click on the confirmation link. This will take you to the second and final sign-up page. You will need to include your address, phone number and social security number. These pieces of information are required for Credit Karma to retrieve your score from the credit bureaus. Click the final link--Get Your Free Credit Score--and follow directions to get your score almost immediately.

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What Does a R9 Credit Score Mean?

Credit reports note your bill-paying history, positive and negative. A R9 rating is one of the most negative credit entries that can exist on your report, according to the Equifax credit reporting bureau.

Basic Definition

When an account on your credit report notes R9, it means that it is considered a bad debt whether it was not paid at all, paid consistently late or included in bankruptcy.

Considerations

One or more R9 ratings on your credit report may make it difficult to get a credit card or be approved for an apartment.

Time Frame

Late payments, unpaid accounts, and Chapter 13 bankruptcy-related R9 ratings report for seven years. A Chapter 7 bankruptcy R9 will remain on your file for 10 years.

Moving Forward

Paying all future bills on time will eventually boost your credit rating. You also may need to explain to future potential lenders any special circumstances, including job loss, that led to an R9.

Staying Informed

Check your credit reports at least once a year to ensure the information is correct, whether or not a R9 is involved. See Resources for a link to getting your annual free credit report.

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What Is a Legitimate Dispute on Your Credit Report?

If you have a credit file, there is a chance that you may have information that can be legitimately disputed because it does not belong there. Contact the credit reporting agency with which the information appears and submit a dispute in writing.

Significance

You are allowed to dispute items on your credit report that are inaccurate or incomplete. Errors appear on various credit reports from time to time.

Bad Credit

If you have negative information in your credit file, such as a bankruptcy older than 10 years or a collection account older than seven years, you can dispute these items with the credit reporting agency.

Wrong Account

An account that is not yours can be disputed as well. It is not uncommon for credit information from another debtor to appear on your credit report. Your information can be mistaken for someone with a similar name. A family member's information can get mixed with yours in a case in which there is a Jr. or Sr. II or III involved.

Credit Rating

Some creditors have erroneously reported that a customer was late. If this happens to you, contact the credit agency and dispute the credit rating you were given. Bad credit showing up on your credit report can lower your score even if it's not yours.

Considerations

If you opened a credit card account in 2005 and your credit report shows that it was opened in 2009, you should dispute this as well. An older credit report helps increase your credit score. The wrong date could make it appear as though you have not had credit long and lower your score

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Federal Fair Trade Act Credit Terms

The Federal Trade Commission has a Fair Credit Reporting Act in place that specifies the type of data that can be reported on a credit report, the way in which it is reported and the amount of time that a specific account type can report.

Credit Bureau Responsibilities

Credit bureaus, also known as credit reporting agencies, have a number of responsibilities under the Fair Credit Reporting Act. These responsibilities are different depending on if the credit bureau is one of the "big three" consumer credit reporting agencies, or if it is a smaller, specialty agency.

The big three, TransUnion, Experian and Equifax, must always have the consumer's credit report available so the consumer can view his personal credit information. In addition, the credit report must be provided for free once per year, through annualcreditreport.com. Another responsibility for the credit reporting bureaus concerns the reporting of inaccurate or negative information. If a consumer files a dispute about inaccurate information on an account, this information cannot be put back into the report prior to the credit bureaus notifying the consumer. Negative information can only be reported for a specific time period, typically seven to ten years.

Smaller credit reporting agencies do not have to adhere to the central website responsibility, but they do have to make your report available once per year.

Creditor Responsibilities

Creditors, known as information furnishers in the Fair Credit Reporting Act, are the companies that you have a business relationship with. A creditor can be the company that issued some form of credit, whether it's in the form of a credit card or if the creditor is a collector trying to collect on a debt. The creditors are legally required by the Act to give the most accurate information possible to the credit reporting agencies. The creditors also have to investigate a consumer dispute and provide updated information within 30 days. If a creditor is intending to place negative information on an account or adding a negative account such as a collection, the information furnisher has to let the consumer know within 30 days.

Penalities

Any credit reporting bureau or information furnisher who does not follow the Fair Credit Reporting Act is subject to legal penalties. A consumer can file a lawsuit against a credit reporting agency or creditor for each act that does not follow the guidelines in the FCRA. The maximum penalty is $1,000 per occurrence.

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What Is an Excellent Credit Score?

When it comes to getting credit, your credit score is invaluable. Lenders use your credit score to determine approvals, interest rates and loan amounts. The higher your credit score, the better your interest rates. Credit scores range from about 330 to 850, with anything over 770 considered to be an excellent credit score.

How Your Score is Calculated

Your credit score is calculated using your payment history, employment history, amount of debt, amount of credit and credit history.

How to Get an Excellent Credit Score

Excellent credit scores are marked by timely payments, low debt and moderate credit. Paying bills on time and keeping a low balance on your credit cards will help you improve your credit score. Review your credit history regularly for accuracy and look for any red flags.

Why Credit Scores Decreases

Late payments, delinquencies, bankruptcies, foreclosures, unemployment, having too much credit and credit inquiries can lower your credit score.

If You Don't Have a Credit Score

If you have yet to establish a credit history, you may not have a credit score. Consider opening up a secured or unsecured credit card, and then use it regularly and pay the balance off each month. Doing this will put you on the fast track to excellent credit.

When Credit Scores Change

Credit scores are updated frequently. You may be able to significantly improve your score within a couple of months with responsible spending and saving.

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Do Store Credit Accounts Help Build Your Credit Score?

You do not have a credit score until you actually start using credit, because the score is based on how well you handle your loans and other accounts. Your score builds up over time as you expand your credit use, and sometimes you must rebuild it if you have problems like a string of late payments. Store credit accounts help you get an initial score and improve your number if it goes down for some reason.

Account Reporting

Every loan and revolving credit account that is reported to the three national credit bureaus helps your credit score if you manage them appropriately by making all your payments by the due dates, according to the My FICO scoring site. This includes store credit accounts, because they typically report your records and Equifax, TransUnion and Experian add the information to your credit reports.

Account Types

Store credit accounts come in two types, known as revolving credit and installment loans. A revolving account means that a particular retailer issues you a credit line that you can use in its stores. You can purchase whatever you want at those stores until you reach the limit. Interest accrues monthly on the unpaid balance, and you can make minimum monthly payments that vary with the balance, pay more than the minimum or pay off the entire amount. An installment loan covers one purchase at a store. For example, you might finance furniture or an appliance through a retailer. Your monthly payments are set at a certain amount for the life of the loan. MSN Money columnist Liz Pulliam Weston advises that you need both installment and revolving accounts for the highest credit score.

Benefits

You can usually qualify for a store credit account more easily than a major credit card like MasterCard or Visa, according to Pulliam Weston. You may be able to get one even if you are young and do not have much established credit or if you had some financial problems in the past that show up on your Equifax, TransUnion and Experian reports. Use the account to establish yourself or to repair your bad credit by paying the new bills promptly.

Considerations

Store credit accounts hurt your credit as badly as any other loan or credit card if you consistently pay late or skip your payments altogether. The My FICO site warns that payment history is one of the most heavily weighted factors in your score. The number drops if you let any store accounts become delinquent, and you can only fix it by catching up the payments and rebuilding your on-time history.

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How to Request Your Free Credit Report From the Three Bureaus

Getting free credit reports from the nationwide credit-reporting bureaus is easy. A website, Annual Credit Report, was established by the bureaus to offer free reports under the terms of the Fair Credit Reporting Act. It is the only website authorized by the Federal Trade Commission to offer free credit reports. Other websites advertise that they offer free reports, but many try to sell you a service as you obtain your report. Credit reports through Annual Credit Report are completely free.

Instructions

1

Go to the Annual Credit Report website (see Resources).

2

Click on the "Request Report" button on the Annual Credit Report homepage to access and print a credit report from one of the three major credit-reporting bureaus (Equifax, Experian and TransUnion). You're entitled to three free reports every 12 months, one from each of the bureaus.

3

Repeat the process a second and third time to order free reports from the other bureaus. Or order additional reports by mail. To request a report by mail, click on "Request your report through the mail" on the Annual Credit Report homepage. You will be prompted to download and print a document that must be mailed. Send the document to:

Annual Credit Report Request Service

P.O. Box 105281

Atlanta, GA 30348-5281

4

To order credit reports by phone, call 877-322-8228.

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How Often Can You Run a Credit Check Without Negatively Affecting Your Credit?

Many things negatively impact your credit, most of which are linked to late payments or overspending, but some are as minor as submitting too many credit applications. Occasional credit checks have little impact on your credit score, but too many inquiries impair your ability to qualify for new accounts. Shopping around for a certain loan type with multiple lenders does not affect your credit in the same way as close-together but unrelated credit checks.

Definition

A credit check is a lender inquiry in response to a credit application for a loan or credit card. Any kind of loan or card application generates an inquiry, including major credit cards, retail accounts, gasoline cars, vehicle loans, personal loans, student loans and mortgages. Banks and finance companies check your credit bureau records, which show your past repayment history, past and current accounts, balances and other relevant information. They use this data to accept or reject your application and to determine your credit line for revolving accounts. You give permission for the credit check when you submit your application.

Effects

The number of credit checks it takes to negatively affect your credit varies, depending on the other information on your credit reports. The impact is minor if your records are otherwise stellar, but you might hurt your credit score badly if it is already borderline. A single credit check normally does not knock more than five points off your score, according to the MyFICO scoring website, with a variable deduction for each additional inquiry. You get the most negative impact from more than five credit checks within a short time period, as that makes you statistically more prone to a bankruptcy filing. Your credit reports show inquiries for up to two years.

Considerations

Lenders understand that many consumers shop around for the best interest rates, especially on expensive accounts like cars, boats, houses, student loans or home equity credit lines. Credit scoring is designed to take this into account and eliminate any penalty for multiple credit checks generated by rate shopping. Limit your related applications to a 30-day period and they will be treated as a single inquiry in your credit score calculations, MyFICO advises.

Disputes

Credit checks may appear on your credit report even though you do not recall giving your authorization. Federal law gives you a right to challenge them with the company that pulled your records and get them removed if that company cannot prove it had a right to make an inquiry. Order credit reports from AnnualCreditReport.com, a site run jointly by the credit bureaus, to comply with the federal law that entitles you to free yearly reports. Write to any unrecognized company demanding either proof of your credit check authorization or removal of the credit report entry, the Illinois Attorney General's office advises.

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Easy Ways to Establish a Good Credit Score

With prudence and foresight, establishing a good credit score is quite doable and can only get better over time by adhering to key money-management principles. At the same time, building a financial cushion is an essential component. Doing so will allow the bills to continue being paid in the wake of unemployment or illness.

Pay Bills on Time

There is no substitute for diligence in paying all bills on time. Even household bills not associated with credit cards, such as phone and electric utilities, can have a negative impact if paid late. Consumers should be aware that paying credit cards even one day late can result in late-payment fees, but as long as they are paid within 30 days of the due date, they are reported to the three national credit bureaus as current.

Fix Incorrect Information

Credit reports can be rife with errors having little or nothing to do with a consumer's payment history. Payments could have been improperly credited, there may be a dispute as to the actual amount owed, or credits for returned merchandise or unused services could have been posted later than promised. Consumers should check their credit scores at least once per year and promptly request that errors be fixed. Credit bureaus are required by law to respond to all written requests within 30 days.

Maintain Low Usage-to-Availability Ratio

One of the most influential barometers for a good credit score involves how much credit is actually used compared to the total amount available. Lenders ideally like to see that consumers have ample available credit but do not need to use it. This implies that they are not pressed for cash and have the means to repay any new credit obtained. Even if credit is not needed, a good way to build a higher credit score involves borrowing a small amount from several credit cards while repaying over time. This demonstrates responsible financial-management habits.

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Why Didn't My Credit Score Improve?

It can be disheartening to pay off your debts and see no improvement in your score, but sometimes you just need to wait a little bit longer. Other times, you could have a problem with not using a creditor that reports to any of the major bureaus. Alternatively, you might not have done anything that raises a score in the credit-scoring formula.

Considerations

Nobody can say if something will definitely improve a credit score, because the formula is a trade secret. With what is known, you usually need several months to increase a credit score when coming back from disastrous incidents, such as a creditor selling the account to a collection agency. Paying bills on time for just a month, for example, probably won't be enough to improve your score, but you should see an increase after three to six months. At the other end of spectrum, extremely high scores -- above 800 -- are nearly impossible to improve.

Creditor Reporting

Check your credit report to make sure that the lenders you use also subscribe to the reporting services of the major credit bureaus. Some providers of ongoing services, such as utility companies and landlords, cannot report customer data or do not because of the cost. Credit agencies won't report data if a lender does not pay for a reporting subscription. Also, creditors may forget to update your report.

Time Frame

You might just need to give the bureaus some time to update your credit report. The bureaus usually take at least a month to update their databases with new information and possibly longer. Only if you do not see an update after 90 days should you contact the creditor or credit bureaus about why you do not see an update to your credit report.

Tip

If the creditor does not update your report and subscribes to the reporting services of the major bureaus, you can update the data yourself by sending proof of payment to the bureaus. They do not have to use data from the customer, but they often do as a courtesy. You could self-report the payment history to an alternative credit bureau when your creditors do not deal with the major credit agencies. Lenders may accept an alternative credit report if you do not have a traditional credit history.

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Secrets to Increase Your Credit Score

A credit score is a number lenders use to rate a person's creditworthiness. Based on the credit score, a lender is able to determine if a borrower is likely to repay a loan. The lower your credit score, the more of a credit risk you appear to be to a lender. Having a high credit score saves money on interest and lowers the full amount you must pay back to discharge the loan. According to Veracity Credit Consultants, credit is made up of five categories listed below (See References).

Payments

One factor that affects 35 percent of your credit score is how timely you make your payments. Making payments late, having collection accounts and bankruptcies all lower your credit score. An easy way to prevent payments from being late is to set up auto-pay on credit accounts, such as credit cards and loans.

Outstanding Credit

Thirty percent of your credit score consists of outstanding debt. To raise your credit score, never max out credit cards or close out old credit-card accounts that have a zero balance. Keeping your credit-card balances below 25 percent of the credit limit helps raise your credit score.

Credit History

The length of time you have had credit controls 15 percent of your credit score. Being patient after establishing credit before making larger purchases, such as a home, may be beneficial. Also, start establishing credit as soon as you are a legal adult, and keep the accounts in good standing.

New Credit

Receiving new credit can lower your credit score. New credit accounts for 10 percent of the total score. Avoid opening new lines of credit before a major purchase, such as an auto. Do not allow each creditor to pull a credit report since inquires lower your credit score.

Type of Credit

There are four basic types of credit that control 10 percent of your credit score. These are revolving, such as credit cards, loans such as auto or personal, public records and collections. The positive types of credit are revolving and loans. They help improve your credit score if you make the payments on time and avoid becoming overextended. Having public record and collection accounts on your credit lowers the score. Avoid receiving these from tax liens or bankruptcy.

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Do Cosigners Show on Credit?

A co-signer signs a credit obligation with another individual. Often a co-signer is used when the credit or income of the primary signer is insufficient to to enable him to obtain the loan on his own. A co-signer can be a good way to help out a relative or friend, but it does come with a certain degree of risk not only to your credit but to your wallet as well.

Considerations

Both the primary signer and co-signer on a credit obligation are equally responsible for the debt. This applies to loans such as car loans, student loans or a mortgages. The creditor reports the debt to the credit bureau and it appears on the credit reports of the primary signer and co-signer. The credit report reflects any activity on the debt, whether positive or negative.

Significance

The applicant on a credit obligation, the primary signer, is usually the person who makes the payments. If the signer makes a late payment, the lender reports this to the credit bureaus. Since the co-signer and signer both appear on the credit obligation, this late payment also shows up on the credit report of the co-signer. A 30-day late payment can drop your FICO credit score by as much as 110 points, according to MSN Money.

Consequences

If the primary signer stops paying the bill, the lender will seek payment from the co-signer. If the debt becomes seriously delinquent, the lender may turn that debt over to a collection agency. Under the Fair Credit Reporting Act, collection agencies can pull the credit reports of debtors, in this case, both the primary signer and co-signer. Depending upon the amount of the debt, the agency or the lender may decide to sue the primary signer and co-signer to obtain a judgment.

Warning

A judgment against you as the co-signer will appear on your credit report as a public record. According to myFICO, a public record is an an adverse credit report item and will damage your FICO credit score. How much your score falls depends upon the other information in the report. Also, the judgment owner may be able to garnish your wages or place a lien on your property. The judgment could also lead to the seizure of funds in your bank accounts.

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How to Get All 3 FICO Scores

The three credit reporting agencies, Equifax, Experian, and Transunion, each compile information on a persons credit history including payment history on past and present credit card accounts, mortgages, loans, and other debts or payment agreements. A complex formula is applied to this information to determine your credit score, or FICO score. FICO scores range between 300 and 850 with 300 being bad and 850 being perfect. To obtain a FICO score for each credit reporting agency, there are several steps to take.

Instructions

1

Go to MyFico.com and under myFICO Products, select FICO Standard.

2

Click Buy Now, fill out the information, and purchase both the TransUnion and Equifax FICO scores.

3

Go to Experian.com and find the link that says Experian Credit Score and Report Get Yours Today.

4

Click the link, fill out your information, and purchase your Experian report and score.

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How to Get a Credit Score without a Credit Card

Credit cards can have a big impact on your credit score. The number of credit cards you hold, the spending limit on each card, and your payment history has an effect on your credit score. If you don't want to have credit cards but still want to build up a credit score, there are several other ways to do so. Many other types of accounts will also affect your credit score; if you open some of these accounts you can get a score without having a credit card.

Instructions

1

Take out a personal loan. If you have a savings account at a bank or credit union, you can take out a small loan that is secured by the account. This will allow you to get the loan easily without having a credit score. You will build your score based on how you repay the loan.

2

Take out a car loan. Lenders may be willing to give you this type of loan, even if you haven't already built up a credit score, because it is secured by the vehicle. This is especially true if you can make a large down payment that reduces the loan amount to a total below the car's actual value. The car loan will count in building a credit score.

3

Apply for a store-based credit account. Many stores that sell big-ticket merchandise, such as furniture and appliance retailers, will allow you to do this. Their criteria for granting a loan are often less stringent than credit card issuers', so you may be able to qualify without a credit score. These accounts help you build up a credit score based on the same criteria as a credit card account.

4

Request free copies of your credit report to make sure all of your accounts are being reported to the three major credit bureaus. You are entitled to get one free copy per year from each of the bureaus. If you do not see an account reported, contact the lender and ask if it will do so. The credit bureaus must get the information in order to figure it into your credit score.

5

Request your credit score from the free Credit Karma website. This will allow you to see whether your efforts at getting a credit score without having a credit card are successful.

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How to Change Your Address With Credit Agencies

If you want to change your address with a credit reporting agency, notify each one. The primary credit reporting agencies are TransUnion, Equifax and Experian. When you apply for a loan, the prospective creditor will access your credit report. If you provide your current address, this information will be put into the system and the credit reporting agency will update the information. This change only takes place with the credit reporting agency you apply with. They will also notify the creditor if the information does not match previous records. This is for security purposes.

Instructions

1

Go to the Web site of each credit reporting agencies. You can fill out any forms they request and include a photo copy of your drivers license or photo identification with your new address. You may want to include a current copy of an utility bill. A bank statement will be sufficient as well. These documents will help to protect you from identity theft.

2

Send the information to all three credit reporting agencies. Give the credit reporting agency approximately 30 days to update your information. If they have questions or need additional information they will contact you.

Mailing addresses:

TransUnion Consumer Solutions, P.O. Box 2000, Chester, PA 19022-2000.

Equifax Credit Services, P.O. Box 740241, Atlanta, GA 30374.

Experian 475 Anton Blvd. Bldg D, Costa Mesa, CA 92626.

3

Go to annualcreditreport.com and get a free copy of your credit report to see if the changes have taken place. If you have waited the allotted time and the changes have still not taken effect, send a follow-up letter. You may obtain a free credit report every 365 days from each agency. You can order online, by phone or by mail. When you request your information by mail you may have to include photo identification, such as a drivers license, state identification, military ID or a passport as well as the other verification documents such as utility bill and a bank statement.

4

Visit a U.S. post office and put in a change-of-address requestor go to www.usps.com. Any creditors sending out information to you will automatically receive an update on your new address.

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Derogatory Credit History

Under the Fair Credit Reporting Act, your creditors have the legal right to report both negative and positive aspects of your bill-paying history, according to the Federal Trade Commission. However, even if you didnt pay your bills as agreed, you still have a number of rights regarding any derogatory credit reports issued in your name.



(Reference 1)

Function

Credit reports, including any derogatory information, are used to determine everything from whether you can receive a mortgage loan to the rates you must pay for a car insurance policy, according to the Consumer Federation of America.

(Reference 3)

Types

Negative credit reports can range from a loan payment made at least 30 days late to unpaid medical accounts turned over to a collection agency, according to Experian.

(Reference 2)

Time Frame

Almost all negative credit information can be legally reported for seven years from the date of original delinquency, according to Experian.

(Reference 2)

Exceptions

Chapter 7 bankruptcies can be legally noted on your credit report for 10 years from the date you declared insolvency, according to Experian. Some tax liens and lawsuits can report for 10 to 15 years, depending upon the nature of the case and whether it was eventually paid.

(Reference 2)

Considerations

You can legally dispute any inaccurate credit reporting information, according to the Federal Trade Commission. Generally, the reporting agency or the creditor providing the information must investigate your dispute within 30 days of receiving it.

(Reference 1)

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Can Unsecured Credit Cards Rebuild Credit?

For those who have declared bankruptcy, rebuilding credit from scratch may seem like a monumental task. However, those who qualify for unsecured credit cards may find that by using them wisely their credit bounces back to healthy levels. Used irresponsibly, credit cards may also have the opposite effect and users may see their scores plummet.

Unsecured Credit Cards

An unsecured credit card is one that is not secured to any type of collateral. Typically, to obtain a secured credit card, you need to deposit money into an account, and the amount you deposit becomes your credit limit. For example, if you deposit $500 into your account, you may spend only up to $500 on your card. On unsecured credit cards, your creditor does not require that you place a deposit to borrow against. Your credit limit and interest rate are determined by your creditworthiness as demonstrated by your credit score.

Credit Score

Your credit score is a snapshot of your financial responsibility. You must be aware of all of the issues that affect your credit score if you want to rebuild; simply using an unsecured card won't cut it. According to Smart Money writer AnnaMaria Andriotis, 35 percent of your score is made up of your payment history. Another 30 percent goes to your debt utilization ratio, or the relationship of your balances to your credit scores. The length of your credit history makes up 15 percent, while new credit and diversity of credit each make up 10 percent.

Usage

When you are careful with your credit cards, you may boost the payment history and debt utilization ratio aspects of your credit score, whether they are secured or unsecured. To rebuild your credit, you must make your payments on time every month. A single payment that is more than 30 days late may drop your score by as many as 100 points. Also, you must keep your balances low; the Better Business Bureau recommends keeping balances to 25 percent or lower. For those who have trouble managing their finances, it's best to pay off credit cards each month.

Warnings

Those who have had past financial trouble must be extremely cautious when using credit cards again. To rebuild credit, you must demonstrate that you are responsible with your money. To keep from charging on your credit cards, create a budget and use money you actually have, then turn to your credit cards selectively for one or two purchases throughout the month, then pay them off immediately.

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What Does Derogatory Information Mean on a Credit Report?

Derogatory information on your credit report can take a number of different forms. This type of information is the same as having bad credit. Your credit score can be affected negatively by derogatory information. Derogatory credit can be collections and public records.

Effects

If you are late with your payments on a credit account, this can show up on your credit report. When your payments are 30, 60 or 90 days late or longer, this is considered derogatory credit information.

Considerations

When you dont pay a debt, a creditor can file a lawsuit and get a judgment against you. A judgment is considered derogatory information and it can remain on your credit file for seven years.

Significance

Derogatory information on your credit report can lower your credit score. When your credit score is lowered, your ability to receive credit in the future will be impaired.

Warning

A bankruptcy is considered derogatory credit information as well. If you file a petition for bankruptcy, a credit score of 780 can be lowered anywhere from 220 to 240 points, according to CreditCards.com.

Benefits

Any derogatory information remaining on your credit file longer than seven years can be disputed with the credit reporting agency that has the information on file.

Expert Insight

A foreclosure is also considered derogatory information and remains on your credit file for seven years, as well. According to CreditCards.com, a foreclosure can lower a credit score of 780 by 140 to 160 points.

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How to Find a Good Credit Repair Counselor

The Federal Trade Commission says you should turn to nonprofit credit counseling agencies for help repairing your credit. The agencies, including those affiliated with Consumer Credit Counseling Service, will offer nonjudgmental advice regarding your credit. Their services are often free and may include free financial literacy classes to help you manage your credit on your own. The FTC says you should not hire for-profit credit repair agencies or debt settlement firms. The FTC says many of the firms engage in unscrupulous business practices and often do not deliver what they promise.

Instructions

1

Visit or call your bank or credit union. Tell a loan officer that you need help repairing your credit and would like the names of nonprofit credit counseling agencies in the area.

2

Get additional referrals by contacting community organizations such as the United Way, Urban League or Salvation Army.

3

Call the nonprofit credit counseling agencies to speak with a counselor. Tell the counselor about your problems and goals and ask how she can help. Ask about costs as well.

4

Evaluate the counselors based on your interviews. Judge them on patience, friendliness, knowledge and their ability to understand your concerns. Then make an appointment to see the counselor who appears to best fit your needs.

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Tricks to Disputing a Credit Report

Your credit report contains information about your debt management history and is used to calculate your credit score. Your credit score is a number used by lenders and others to determine how creditworthy you are when considering you for a loan or lease. Employers may even look at your credit report when considering you for a job or a promotion. You should check your credit report at least once per year to make sure all the information is correct. If you find errors, appeal them as soon as possible to fix your credit score.

Appeal to Both the Credit Bureau and the Creditor

When most people appeal items on their credit report, they only appeal to the credit bureau. Instead, the Federal Trade Commission recommends that you write to both your creditor and the credit bureau. When you file a complaint with your creditor, the creditor must investigate as well. If the error is on the part of the creditor, it will make the change and inform the credit bureaus. Even if the creditor rejects your claim, it must include a note explaining your dispute whenever it reports that information to the credit bureaus.

Contest Older Problems

If you have older negative information on your credit report, MSN Money suggests you may be able to remove it by appealing it. Creditors and collections groups may not respond to a credit bureau inquiry, especially if the account has aged and was a small amount, which means the information will be removed automatically. However, do not suddenly appeal all of the negative information on your credit report. According to federal laws, if a credit bureau has reason to believe your disputes are frivolous, it is no longer bound by federal law to investigate all of them. This can be especially damaging if one or more of your disputes are truly legitimate.

Goodwill Considerations

According to MSN Money, creditors may be willing to grant you some "goodwill," meaning they will voluntarily erase one or more late payments from your record. The better customer you are, the more likely a company will be willing to do this for you. For example, if you have only had one late payment over three years with the company, you are more likely to have that late payment removed than if you have had multiple late payments. In order to request goodwill, you have to write to the creditor requesting it. While the creditor may say no, your credit score will not decrease as a result of requesting goodwill.

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How Long Will Unpaid Credit Debt Stay on Your Record?

Credit debt includes things like Visa, Mastercard, American Express and Discover credit cards, retail accounts, gasoline cards and loans. These accounts typically require monthly payments when there is a balance. People sometimes stop paying, and the FICO credit score company explains that this lowers their credit score, since payment history accounts for 35 percent of that number. Unpaid debts eventually lose their effect because they are removed from credit bureau records.

Process

Creditors report unpaid credit card debt is reported to Equifax, Experian and TransUnion, the three major credit bureaus. These credit bureaus reflect the length of the delinquency in their records. Liz Pulliam Weston, a financial columnist for MSN Money, explains that lenders often "charge off" unsecured debts like credit cards when there is no payment for at least six months. Charging off the account is simply a term that means the company doesn't expect to get paid -- the debtor still owes the money. The credit card compnay can still try to collect or sell the account to an independent collection agency. Lenders are allowed to seize the collateral on secured debts when the borrower defaults. For example, auto lenders repossess vehicles when car loans go unpaid, and banks foreclose on homes when mortgages go into default. All this activity goes onto the person's credit reports.

Time Frame

Credit reports show unpaid credit debts for up to seven years, starting from the initial delinquency date. FICO considers the information in its credit score calculations, and banks and other lenders see it whenever they review the reports in response to credit applications. Bad debt has its worst impact in the first few years. It loses power over time for people who rebuild their credit by paying current bills on time for several years.

Removal

The credit bureaus usually erase old unpaid debts automatically from their records after seven years. Consumers can check that such records have been removed by ordering their credit reports from each bureau through annualcreditreport.com. The bureaus are mandated to give each consumer one free report per year by the Fair Credit Reporting Act, and people who find old debts that are still listed can dispute the information and ask for its removal.

Alternative

People who have many unpaid debts and who cannot handle their current accounts sometimes file bankruptcy as their last option. This court action stops proceedings like foreclosures and vehicle repossessions and gets rid of most debts or forces creditors to accept a repayment plan. Bankruptcy appears on credit reports and stays for 10 years, so it affects a person's credit score and ability to get new loans and credit cards for a longer period than unpaid debts.

Warning

Paying unpaid debts does not necessarily improve a person's credit records. Steve Bucci, the Debt Adviser columnist for Bankrate.com, recommends getting an agreement from the creditor to change the account status to "paid as agreed" or to pull it from the credit reports entirely in exchange for paying it off. Lenders often accept less than the original amount in negotiated settlements.

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How to Build Credit Without a Credit Card

Your credit history determines whether you'll qualify for a mortgage loan and what rates you can get. There are several ways to establish a credit history. And in some cases, you can build a strong credit rating without using a credit card.

Instructions

1

Open a bank account. Credit applicants typically inquire about a bank account, and having a bank account demonstrates your ability to manage finances. Contact a bank or credit union and open a checking or savings account.

2

Apply for an auto loan. Several dealership and auto lenders offer no credit or bad credit auto loans. These are ideal for individuals who want to build credit without a credit card.

3

Consider a small bank loan. Apply for a small bank loan and make timely payments, or pay off the balance within a couple of months. The lender will report this account to the credit bureaus, and this can help you establish a credit rating.

4

Add your name to someone's account. Ask a close relative (with good credit) to add your name to one of their credit accounts. This is a quick ways to build credit without a credit card. Their credit account appears on your report, and you'll establish a rating.

5

Practice good credit habits. Once you've obtained a few credit accounts, building credit involves wise choices. Pay your creditors on time to maintain a high rating. If possible, submit early payments.

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Why Does Canceling a Credit Card Lower Your Credit Score?

Credit scores are based on a variety of factors, including total debt, available credit, creditor payments and the length of a credit history. When a consumer takes an action to acquire or cancel credit, it will affect an overall credit score.

Credit History

If you cancel a credit card that you've had for a long time, it will likely lower your credit score, as your overall credit history will be shortened.

Credit Ratio

If you cancel a card with no balance, but maintain other credit cards with balances, it will change your balance-to-limit or credit utilization ratio. This will show that you have less available credit, but the same debt.

Types

A small part of credit scoring is based on a mix of credit types. If you cancel all of your credit cards and don't have any other lines of revolving credit, it will lower your credit score.

Time Frame

Canceling numerous credit cards within a short period may indicate financial problems to lenders.

Considerations

Canceling a credit card will not always lower a credit score. If you have a large number of credit cards, canceling the newest card with a low available balance may actually improve your score.

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Can You Rebuild Credit?

A person's credit score is an estimate made by financial services companies of the individual's creditworthiness. One of the first things a lender will consider when deciding whether to loan money to an individual is the person's credit score. If the person has damaged his credit score, he can rebuild it, although it may take a while.

Credit Scores

All credit scores are based totally upon the information contained in a person's credit report that relates to his credit history. The more positive information contained in this report, the better the individual's score; the more negative information, the lower the score. A person can rebuild his credit by performing actions that place more positive information in the credit report.

Paying Off Debts

The first thing a person can do to raise his credit score is to pay off his outstanding debts, particularly his delinquent debt. The more delinquent debts that a person has, as well as the higher his overall debt load, the lower the person's credit score will go. By paying off his debts, the person will be able to eliminate some of the more negative information on the report.

Taking Out New Credit

After a person has bandaged his score by getting rid of his old debts, he can begin the rebuilding process by taking out new lines of credit, taking out new loans and paying these loans back on time. By demonstrating that he can take out credit and pay it pay on time, the individual will show credit reporting agencies that he is creditworthy, and, ultimately, his score will rise. However, paying late will cause his score to decline further.

Considerations

Rebuilding credit is a long process. Although there are some quick fixes a person can do---paying off debts being foremost among them---credit reporting agencies have long memories. Negative information on a credit report can stay on there for a maximum of seven years---10 years in the case of a liquidation bankruptcy---during which time this information can continue to drag down a person's score.

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Can Getting Credit Help My Credit Score?

The FICO score is the most widely used credit score used by lenders to determine your eligibility when you apply for credit cards and loans. Applying for credit, especially if you do not have other loans or credit cards, helps your credit score by improving your mix of credit, which accounts for 10 percent of your credit score.

New Credit Inquiries

When you apply for new credit, the creditor almost always pulls your credit score. When they do, your credit report notes the inquiry, which lowers your credit score. The more applications for new credit you have, the more your credit score will be lowered. However, new credit inquiries only account for 10 percent of your credit score, so one or two inquiries will not have a significantly negative impact. In addition, unlike most other information, inquiries only remain on your credit report for two years.

Credit History

Getting credit will result in your payment history being reported on your credit report. This can be a benefit or a drawback depending on how well you pay your bills. Making on-time payments on a consistent basis over time will help your credit score because your payment history accounts for 35 percent of your credit score. However, payment history is a double-edged sword because if you miss payments, or become delinquent on your accounts, your credit score will suffer.

Length of History

If you wait until you need a large amount of credit, such as a mortgage, before applying for any credit, you could face a difficult task because you will not have established your credit history. Your length of credit history counts for 15 percent of your credit score with longer credit histories receiving higher scores. Applying for credit early will help your score because you will be able to show you can manage your finances for a longer period of time.

Lowering Debt to Available Credit Ratio

The amount of money your owe accounts for 30 percent of your credit score. Part of that category looks at how much you owe compared to your maximum credit lines. MSN Money recommends keeping your balance under 30 percent of the maximum amount you can use on your cards. If you have multiple cards, you can benefit from the extra available credit on cards you do not use regularly or you can spread your spending over multiple credit cards.

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How to Build Credit if You Have a Poor FICO

When you apply for a mortgage, a car loan or other credit, the lender looks at your FICO score, which is a numerical assessment of your credit risk compiled using programs developed by Fair Isaac and Company. Your FICO score can range from 300 to 850; the higher it is, the better rate you will get on a loan. If it is too low, you will pay more for your loan. And if it is too low, you won't get a loan at all. If your FICO score is low, there are several things you can do to improve it.

Instructions

1

Get a free copy of your credit report from AnnualCreditReport.com. You need to provide the service with your full legal name, date of birth, Social Security number and credit card information to verify your identity.

2

Read your credit report. If there are any errors, report them immediately to the credit bureaus by using the "Contact Us" link on AnnualCreditReport.com website. List the account that is in error and why you think it is in error.

3

Follow up. By law, you must receive an answer to your inquiry within 30 days of your email. If the error was not removed, contact the original credit lender to see why the error was reported. Keep a record of all contacts and a copy of any written correspondence.

4

Pay your bills on time. Making on-time payments is one of the most important ways you can improve your FICO score. If necessary, call your creditors and work out a payment plan to become up to date on all payments.

5

Pay off all collections, liens, judgments and bankruptcies in full. These will stay on your credit report for seven to 10 years, but they will have a less-negative impact on your score if they are listed as paid in full.

6

Pay down all credit cards to less than 30 percent of the credit limit. This can quickly raise your credit score.

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Does Breaking a Lease Hurt Your Credit if You Cannot Pay?

Life changes, such as unemployment or a medical disaster, can hit anybody at any time, but the credit reporting bureaus do not keep track of your personal life. If you have to break a lease, prepare for a hit to your credit rating. However, there are legal ways to get out of your lease. In the future, you should look for housing that does not entail a lengthy obligation.

Identification

Breaking any lease, such as for an apartment or car, almost always damages your credit rating, even if you cannot pay. Inability to pay a debt cannot be a legitimate excuse to default on any debt, because consumers could use that argument for failure to pay any bill. Even if a creditor does not report to the credit bureaus directly, the bureaus will find out about the debt through public records or if a collection agency reports the debt.

Negotiate Termination

Most landlords will negotiate a termination of your lease rather than risk you breaking it voluntarily and forcing a lawsuit. Your lease may even have a termination clause in it, such as a month's rent penalty and the cost to clean the place. The landlord may also help you find another tenant to assume your lease. Walking away from the lease should never be an option.

Legally Breaking Lease

There may be some instances where you can legally break your lease. For instance, some states allow members of the military to terminate a lease when they go overseas, according to Sally Anderson of MSN.com. You also may be able to terminate a lease when the lessor does not fulfill his obligations and causes you danger, such as if your roof collapses and the landlord refuses to pay for repairs.

Tips

For your next lease, look for one with a short-term obligation, such as three months, or a month-to-month lease. You can also negotiate an early-termination option in your lease, such as a month or two months' rent penalty plus payments until someone assumes the lease. If your income is not enough pay for the dwelling, look for government help. You may receive rental assistance if your rent comprises more than 30 percent of your pay and your landlord accepts housing vouchers.

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Will Pre-Approval Affect My Credit Score?

Maintaining your credit score at the highest possible level is important. You need a high credit score to get credit cards, loans and other accounts. Your score might also be used by prospective employers and insurers. Because of this, you should be aware of how certain actions, such as pre-approvals, can affect your credit score and how to minimize their impact.

Effects

According to FICO, which created the formula to calculate most credit scores, inquiries by creditors can have a negative effect on your score. They are one small factor in determining your score. The amount and age of your accounts and your payment history are the most important factors. However, inquiries can bring your score down, particularly if there is a high number of inquiries within a short period of time. Some types of pre-approved credit can cause an inquiry to appear, so it's important to know which ones.

Credit Card Pre-Approval

A credit card pre-approval does not affect your credit score unless you accept the offer and open an account. Credit card companies purchase information from credit bureaus to pre-screen consumers for certain offers. These purchases do not show up on your credit report as an inquiry, so they do not affect your credit score. If you don't accept the offers, they will never be reflected on your credit report. If you accept an offer, the credit card account will affect your credit score the same way as your other accounts, regardless of that fact that you were pre-approved.

Home Loan Pre-Approval

Getting pre-approved for a home loan might affect your credit score, depending on the information used by the lender for the pre-approval. Some mortgage companies provide offers based solely on information you give, such as bank records and pay stubs. This does not affect your credit score. Some companies will pull a copy of your credit report. If they make an inquiry to the credit bureaus, that can affect your credit score the same way as any other inquiry.

Car Loan Pre-Approval

The effects of a pre-approved car loan on your credit score depends on how the lender determines pre-approval. If you are a long-time customer of a bank or credit union, the company might not pull your credit report before giving approval. Your credit score is not affected because there is no inquiry, If you are dealing with a lender that reviews credit reports, the inquiry will show up and affect your score.

Opting Out

Even though pre-approved credit card offers do not impact your credit score unless you accept the offer, you might wish to opt out of receiving these offers. This can be done through OptOutPrescreen.com or by postal mail. If you do this through the website, it will be in effect for five years. You can opt out permanently by printing out a form from the website and submitting it via postal mail. This process does not affect pre-approvals you request, such as home or car loans. It stops only unsolicited pre-approved credit card offers.

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How to Check for Identity Theft

Being a victim of identity theft can be emotionally and financially draining. Prevention is the key to avoiding the hassles that identity theft can bring to your life. You also need to check your financial situation on a regular basis to see if you have been a victim and take control of identity theft protection.

Instructions

How to Check for Identity Theft

1

Check your bill statements. Whether you receive your bills electronically or by snail mail, be sure to carefully check your bill statements every month. If you see any activity on your accounts that does not belong to you, contact the bill company immediately. If you have been a victim of identity theft, you may receive bills from companies you don't even have an account with. Again, contact these companies immediately to report that the account is not valid and does not belong to you.

2

Check your bank statements. Thieves tend to be sneaky and come up with unique ways to steal your money. Whether it is stealing one of your bank checks or using your debit card number to make purchases, you need to look for unauthorized transactions on your bank statements each month also.

3

Check your credit report. At least once or twice a year, you should pull and check your credit report from all three of the credit agencies: Experian, Equifax and TransUnion. Review all the personal information on all three of the credit reports. Check for accuracy of facts, as well as unauthorized credit accounts, loans or other types of transactions that do not belong to you. Report any inaccuracies to each of the credit agencies immediately.

4

Be aware. The key to checking to see if you have become a victim of identity theft is to be aware. Carefully review all of your financial records on a regular basis. Make sure these records are accurate and work on correcting any inaccuracies immediately. By being active in your financial situation, you will help to ensure you do not become a victim, and if you do fall prey to an identity thief that you can head it off at the pass before it blows up into a major financial problem.

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