Whenever you apply for a credit card, submit a loan application to a bank, apply for a mortgage to buy a house, or finance the purchase of a car, the lender uses the information contained in your credit report as a determining factor in making the decision to extend credit or approve a loan. If you are like most people, you probably have never actually seen a copy of your credit report, even though plays such a decisive role in making it possible for you to live the lifestyle you desire.
Credit card companies and lenders are not the only ones looking at your credit report. Landlords, insurance companies, and employers are referring to the information contained in a credit report to make decisions that could affect what apartment you can rent, how much you pay for your car insurance, and whether you get that dream job.
Some important facts about your credit report
A credit report is a detailed summary of your credit history that may include the following information:
- Personal data including current and previous addresses
- Your Social Security number
- Current and past employment history
- Information about current loans and credit cards with payment histories
- Information about closed credit card or loan accounts with payment histories
- Information about what has been turned over to collection agencies for nonpayment
- Public records information, such as judgments, tax liens, and mortgages
- Inquiries made by third parties into your credit history
- Bankruptcy and other negative information about your credit or finances
There are three credit reporting agencies that gather information about you and generate credit reports: Experian, Equifax, and TransUnion. The three credit agencies, or credit bureaus as they are frequently called, collect and store data on you and use it to prepare a credit report when one is requested.
Access to credit reports is restricted by state and federal laws
The Fair Credit Reporting Act is the primary federal statute limiting access to your credit report. As a general rule, you are the only person who can obtain a copy of your credit report. Exceptions allowing others to obtain access to the information contained in your credit report include:
- Persons or entities to whom you grant permission in writing, including employers or prospective employers
- In response to a court order or subpoena
- As part of a credit transaction or application for insurance that you initiated
- As part of a business transaction that you initiated
Your current creditors may periodically access your credit report without your express written consent in order to monitor your credit-worthiness. This is allowed under the law and you cannot block it as long as you have an ongoing credit account with the company or entity making the request.
Know the contents of your credit report
It is important to understand what your credit report is saying about you and the only way to do that is periodically review a copy of it. You can get a free copy of your credit report from each of the credit bureaus once a year. If you find errors in the information being reported about you, your credit report contains detailed instructions on how to dispute it.