How Does Equifax Obtain its Information?

Equifax is one of three national credit bureaus that control almost all consumer credit reporting in the U.S. It obtains much of its information from you and your lenders. The other major credit agencies also operate this way. Sometimes, the location of Equifax's headquarters leads to it obtaining less -- or more -- information than its competitors.

Identification

Equifax obtains information from your creditors, such as traditional banks, department stores and collection agencies. It also scours public records for judgments that indicate you failed to pay back a debt, such as a wage garnishment order. Creditors report any information you claim on a credit application, even demographic data, so technically some information comes from you, the consumer.

Regional Dominance

The major credit bureaus formed in different parts of the country and operated only in their region until the local bureaus began consolidating in the late 1970s and 1980s. Thus the major agencies tend to have better connections to customer data in the regions in which they historically operated. Equifax started in Atlanta, Georgia, so it receives more information from creditors in the southern and eastern parts of the U.S.

Credit Report Disputes

Consumers have the right to correct mistakes in their credit files under the Fair Credit Reporting Act. This includes demographic data, such as past employers, addresses and telephone numbers. Customers can also give Equifax information to correct errors by a creditor or dispute items they think Equifax wrongly reports, such as a collection account they do not owe.

Tip

Lenders must subscribe to Equifax's reporting service to give the company data. The cost of the subscription and complying with regulation prohibits some creditors, especially smaller ones, from using this service. Credit reporting service companies arose to allow small-time lenders to report payment histories. A credit reporting service company acts as a proxy for creditors, helping them put data in a format the credit bureaus accept.

Read More

How to Update an Equifax Tradeline

A low credit score can create higher interest rates that will cause you to spend more money for an item over the course of several months or years. Keeping your Equifax credit report as well as your TransUnion and Experian credit report up-to-date will ensure your credit score and other information remains accurate. If you do find inaccurate information or specific accounts that need to be updated, properly contacting Equifax will allow any updates on your credit report to be efficiently handled.

Instructions

1

Obtain a copy of your Equifax credit report. Even if you know the tradeline that needs to be updated, you still need to have it to efficiently update the information. You can contact Equifax to order your credit report or you can access your credit report online. You can also use sites like Annualcreditreport.com and Freecreditreport.com to access your credit report.

2

Locate the tradeline that needs to be updated and list the account number, name of the creditor, amount, and other details, so Equifax can identify the tradeline.

3

Write a letter to Equifax explaining the update. Reference the tradeline information you recorded as well as any proof, such as copies of bills, data, or identification to validate the update. Conduct an online dispute requesting an update to the tradeline if you ordered your credit report online.

4

Include the credit report reference number, which is located on the right corner of each page of your Equifax credit report, so they can access your records.

5

Send the letter requesting the update to Equifax via certified mail. Based on the Fair Credit Reporting Act, Equifax has between 30 and 45 days to respond to and fix the problem on your credit report. Sending the letter by certified mail proves Equifax has received the letter, and a signed receipt will be sent back to your home. Equifax will send you an credit report reflecting the update.

Read More

Is There a Point Reduction When You Check Your Credit?

Inquiries into your credit report could reduce credit score if the inquiries make it appear you are seeking more credit. The act of checking your credit never hurts your score, however, and it may help prevent identity theft and could enable you to detect negative or erroneous items before they do more damage. You can perform this check for free once a year, but you may have to pay to get a more detailed picture of how lender's view your report.

Theory

Some may be led to believe checking your own credit reduces your credit score, because an inquiry is noted on a credit history whenever the credit is checked, whether it affects your credit score or not. If you check your score frequently, especially through a third-party credit monitoring service, it could appear you need credit because of financial hardship or concern about current debts, even if the inquiry does not lower your score.

Reality

Checking your own credit counts as a "soft inquiry." Soft inquiries appear on your credit report when you pull the report yourself or a third-party checks your credit without your consent. It does not affect your credit score. When you apply for credit, the application generates a "hard inquiry," and that affects your credit score slightly. Soft inquiries only appear to the consumer when he pulls his credit report, so lenders never know how many times you check it.

Benefits

Checking your own credit report can be beneficial before shopping for a loan. You want to review the report for any errors, such as on-time payments reported as being late or the presence accounts you never opened. You also can check your credit to draft a plan to improve your score. If, for instance, you use too much of your credit limit, you may want to address that issue first.

Tip

The federal government requires the three major credit reporting agencies--Equifax, Experian and TransUnion--to provide each citizen with one free credit report each year. You should check your report with each agency, because they do not share information and your three credit reports may differ. The free credit report does not include your credit score. The major bureaus, however, usually provide a credit score if you try out one of their services.

Read More

Benefits of a Credit Freeze

Identity theft is growing, with more than 11 million victims in 2009, according to the 2010 Identity Fraud Survey Report compiled by Javelin Strategy & Research. That number represents an increase of one million people since 2008, Javelin explains. Criminals harvest personal information, then use it to get credit in the victim's name. Clark Howard, host of consumer advocacy television and radio shows, advises that a method called a credit freeze stops this from happening.

Definition

A credit freeze is an action that "freezes" a consumer's credit records so they cannot be accessed without permission, Clark Howard explains. The consumer has a personal identification number (PIN) to temporarily "thaw" the file when an authorized party needs to view it. For example, thaws are needed to apply for loans and credit cards. A thaw is done for a specific creditor or a specified length of time. The files are refrozen once the creditor accesses the information or the time runs out.

Benefits

Most lenders -- other than those already doing business with someone -- cannot access a person's credit records when they are frozen. This keeps criminals from opening any new credit cards or getting loans with a stolen identity because they do not have the PIN. Freezes prevent identity theft and also help victims because their stolen information becomes useless for getting fraudulent accounts.

Time Frame

A credit freeze lasts until the consumer decides to remove it from the files. This is more beneficial than a fraud alert, which is a free service for identity theft victims that alerts lenders to carefully verify any new accounts. An alert only lasts 90 days unless the consumer extends it. The extension is limited to seven years and requires a police report, according to the Federal Trade Commission.

Process

Clark Howard, host of consumer advocacy radio and television shows, explains that separate credit freezes must be done with each of the three national credit bureaus. Experian, Equifax and TransUnion all have forms on their websites for both freezes and thaws, or the process can be done through certified mail. Consumers can either choose their own PIN or the credit bureau can generate it. There is a separate number for each bureau.

Cost

Credit freezes usually have an associated cost, although fraud victims can place them for free in certain states. It generally costs up to $3 to $10 to place a freeze and a similar amount to temporarily thaw the records for a credit check, according to Clark Howard. Some states mandate no-cost or reduced price freeze for senior citizens.

Read More

A Company's Right to Pull Credit Reports

A company can deny you employment because of your credit report. A company has the right to pull your credit report if it is considering hiring, retaining you or offering you a promotion. A company's right to pull credit reports of prospective hires falls under the category of background checks. However, employee credit checks must fall within the confines of the Federal Credit Reporting Act rules.

Background Check

Background checks have become the norm for today's job seekers. It is understandable why a company would want to know a little more about you before it makes a hiring decision. Some industries such as law enforcement and brokerage industry require background checks including fingerprinting. Typical background checks involves past employment verification, current employment, character references and a credit check.

Your Rights

The Fair Credit Reporting Act (FCRA) ensures accurate and fair reporting of consumer information by the credit rating agencies. The FCRA also covers reference checks by another employer but not personal references. If a company intends to run a credit check on you, it must notify you and receive your authorization. If the company denies you employment, the company must provide you with a copy of your credit report, along with a copy of "A Summary of Your Rights under the Fair Reporting Act," a document by the Federal Trade Commission. The company must also provide you with the name of the credit rating agency (CRA) it used to make its decision and issue a statement that the CRA was not responsible for its decision. Finally, the company must notify you of your right to dispute the accuracy of the information provided by the CRA.

Credit Check

The fact that a company can refuse to hire you because of a bad credit seems unfair. It is a Catch-22 for a job seeker who may have had good credit at one point but has fallen on hard times. However, many argue that when a company runs a credit check it is more interested in whether you have a criminal background. They argue that a bad credit score is much better than having criminal violations. You may be able to explain your bad credit score but have a harder time explaining away violations. However, once hired, a company cannot use a credit check to fire you. For example, if your employer runs a credit check during your course of employment, it cannot fire you if it learns that you filed for bankruptcy.

Insight

Get a copy of your credit report before you start your job search. The Fair and Accurate Credit Transactions Act (FACTA), an amendment to the FRCA, allows consumers to obtain a free annual report from the credit rating agencies. The CRAs --- Equifax, Experian and Transunion --- established a website, www.annualcreditreport.com, so consumers can get free copies of their credit reports. Check your credit reports for accuracy. Dispute inaccuracies and supply missing or incomplete information. Knowing what's in your credit report provides you with an opportunity to explain your credit history to a company looking to hire you.

Read More

How to Get Rid of a bad credit Rating

Millions of Americans suffer from bad credit ratings. Getting rid of bad credit is not impossible, as long as you follow some steps and be disciplined with your spending habits. Whether you've had some hard times in your life, or just didn't know the importance of a good credit score, it is never too late to change.

Instructions

1




First off, you will want to pay off any debt you have, starting with the biggest debt first. Change your spending habits to live under your means and devote some of your paycheck each month to paying down your debt. Debt consolidators can be a great resource to simplify things, although you should research first.

2

Get a free copy of your credit report through a free credit report service. This will help you gauge where you are and what progress can be made. You can use freecreditreport.com or any other credit report site, sign up, then delete your account before they charge you, which is usually 30 days.

3




Pay your bills on time. This is the number one way to get rid of a bad credit rating. Loan companies wan to see that you can pay your bills and that you are not maxing your cards out. There are bad credit loans out there but when you are ready to buy a car or a house, you'll want the highest marks possible on your report because your payments will be much much lower.

4




Try to not use all your available credit. Lending companies want to see that you don't have to rely on credit and it will show when you are only charging a little bit each month of your total available amount. A good rule of thumb is no more than 30%.

5

Get rid of expenses so that it's easier to pay the bills each month. Do you have a big car loan? Sell the car and get a used car loan for a smaller less expensive car. Cars are depreciating assets and are very expensive. Try lowering your cable bills by getting rid of that expensive movie tier you never use. Eat at home more, whatever you have to do.

6

Lastly, but this is important, don't close old credit accounts just because they are paid off or are standing idle. It is a myth that keeping idle accounts hurts your score. In fact, it will make it better because having more credit open looks good. Especially since its more credit you are not paying late or not at all. Let it sit, and don't worry about it.

Read More

How Long Does Foreclosure Stay on Your Credit?

A foreclosure is among the worst things you can have on your credit history, mostly because of how long it remains. Although there are several credit reporting agencies, a foreclosure shows up on all of them and it's very difficult to remove. Foreclosure can be avoided with with a short sale or deed in lieu of foreclosure. However, these also appear on your credit report.

Types

Equifax, Transunion and Experian are the three major agencies that accumulate your credit information and assign credit scores. They gather data from banks, creditors, insurers and your employers. Your income, amounts you've borrowed and your payment history are all part of the credit reporting agency's records. Your credit score is calculated based on this information as well as any civil judgments or collection actions against you, and bankruptcies and foreclosures you've had.

Effects

A foreclosure will appear in the Public Records section of your credit report. Foreclosures are listed for no less than seven years from the date of the foreclosure sale. There is typically no remedy for this. If you've deeded your house back to the bank in a deed-in-lieu-of-foreclosure or disposed of your home in a short sale, this will often have a similar affect on your credit report, though the lender has some discretion in how they report these transactions.

Significance

A foreclosure on your credit report will make a significant impact on lenders when you apply for a loan in the future. You may be considered a poor credit risk and your application may be denied. However, a lender will sometimes make allowances when mitigating factors like accidents, death of a spouse, natural disaster or civil unrest have contributed to your financial distress.

Prevention/Solution

It's not uncommon for old accounts to show as unpaid when they've actually been settled. By examining your credit reports and correcting inaccuracies, you may be able to improve your credit score to compensate somewhat for the foreclosure. The Fair Credit Reporting Act requires that the credit reporting agencies correct errors on your credit report, but inaccuracies will not be corrected until you dispute them.

Function

To dispute items on your credit report, order reports from each agency and check the details of each item listed. If you find errors, use the contact information provided on the report to speak with the creditor directly. If you are unable to resolve the dispute with creditor, contact the credit reporting agency directly. The credit reporting agencies' websites will tell you what information they require and how you should format your correspondence.

Read More