How to Improve Your Credit Reputation
What can you do to make sure that your report accurately and fairly reflects your creditworthiness? In this article series, you will learn
- Your legal rights when it comes to credit reporting.
- How to fix mistakes on your file.
- How to exercise your legal rights when things go wrong.
The Fair Credit Reporting Act (FCRA) was enacted in 1971 to give Americans the opportunity to find out what information is contained in their credit files, and to help ensure that the information being exchanged with others is correct and complete. When Congress passed that law, however, the credit-reporting industry was much different from it is today.
In the early 1970s, if you wanted to see your credit file, you probably would have gone down to the local credit bureau office and asked to see your file. The clerk would disappear into a room lined with folders and bring out your report-a page or more of notes describing your payment history. Today, if you want to order your credit file, chances are you’ll order it online or from a large national credit reporting agency in another state.
The original FCRA was important legislation when it was passed but became outdated in the electronic age. Using that law to regulate the modern credit reporting system was something like applying horse-and-buggy traffic laws to automobiles.
The following are your rights, including those under the newer credit reporting law passed in 1996.
Your Credit Report: Legal Right #1
You Have the Right to Find Out What Your Credit File Says
If you have never seen your credit bureau, get it. If you have not seen it in the past year, it may be time for a “check-up.”
Here’s a good example of why it’s important to check it: My friend’s car died on her one weekend. She had been hoping to nurse it along, but it just couldn’t hang on any longer. Suddenly, she had to buy a car right away. She went shopping, found one, and applied for the loan. She knew her credit wasn’t perfect, but she was also confident that she knew everything that would show up on it. Apparently, it contained some surprises.
The finance manager told her she had to order a copy of her credit report (which she could only get by mail, since the local credit bureau office no longer handles consumer requests), wait for it to arrive, then explain and dispute the mistakes. That took about a week. In the meantime, she had to scramble for transportation.
Don’t wait until there’s a problem to get your credit report. Order a copy at least once per year or if you are thinking about getting a car loan or mortgage, get a copy ahead of time.
If you have been turned down for credit recently because of information in your credit report, it is fairly easy to get a copy of the report by mail. The rejection letter (called an “adverse action” letter) you received from the bank or credit card company must list the name of the credit bureau from which it obtained your credit report. Save your rejection letter! Call the credit bureau listed on that letter, tell them you have been turned down for credit based on information in their report on you, and ask how to get a copy of your credit report.
If you have not been turned down for credit recently and you want to see a copy of your report. You can order your annual free report from annualcreditreport.com. This is the government mandated site set up by the big three credit reporting agencies. This free annual report will not have your credit scores.