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1. About The Credit Agencies

Credit reporting agencies, also known as credit bureaus, collect and maintain credit history and personal information on the majority of Americans. These agencies get your personal information from the same lenders who grant you credit through agreements they have made that require the credit grantor to inform the credit bureau of everything that occurs in your relationship with the credit grantor. For example, if you are late with a payment, this fact is quickly reported to at least one of the major credit agencies and is added to your credit history. Credit reports not only show how you are currently managing your credit, they are also histories of everything you have done in the past as far as your credit is concerned.

2. How Reporting Agencies Work

These agencies are not affiliated with the government in any way. They are for-profit corporations that sell your personal information for money. The agencies make money by selling credit reports to credit grantors who want to see your credit history before they decide to lend you money (for example, whenever you complete a credit application for a loan, mortgage or major purchase). If you have shown any tendency to pay late or to default on paying your financial commitments, many credit grantors' computers are programmed to immediately reject your application.

3. What's Inside a Credit Report

You'll find your credit report includes extremely detailed information on whether you pay your bills on time, what credit you have applied for, who has given you credit, who has turned you down. Your history of repaying bank loans, utility bills and the government will also be there.

Your credit report lists the following information for each of your credit accounts:

Date opened
Original loan amount or credit limit and interest rate
Scheduled monthly payment amount
Date last payment was made
Balance owed
Amount past due
Payment history for the last 24 months


Credit inquiries from companies that have checked on your credit are also listed - these give potential lenders an idea of how much credit you have sought, successfully and unsuccessfully. Make sure the following basic facts are correct; mistakes can simply be the result of spelling errors, typos, outdated information, or name confusion and also check to make certain no items are in your report longer than the law allows.

Your name
Your date of birth
Your Social Security number
Current and previous addresses
Current and previous employers
Current accounts
Account's that have been closed

4. Inaccuracies In Your Credit Report

If you find errors in your credit reports, you should take steps to correct your reports. Under federal law, both the credit reporting agency, and the organization that provided the information to the agency, such as a bank or credit card company, have responsibilities for correcting inaccurate or incomplete information in your report. To protect all your rights under the law, contact both the credit reporting agency and the information provider.

If you find errors in your credit reports, the credit reporting agencies must investigate the items in question as described by the Federal Trade Commission, usually within 30 days. They also must forward all relevant data you provide about the dispute to the information provider. After the information provider receives notice of a dispute from the credit reporting agency, it must investigate; review all relevant information provided by the credit reporting agency; and report the results to the agency. If the information provider finds the disputed information to be inaccurate, it must notify all nationwide credit reporting agencies so they can correct this information in your file. Disputed information that cannot be verified must be deleted from your file.

If your report contains erroneous information, the credit reporting agency must correct it.

If an item is incomplete, the credit reporting agency must complete it. For example, if your file showed that you were late making payments, but failed to show that you were no longer delinquent, the credit reporting agency must show that you're current.

If your file shows an account that belongs only to another person, the credit reporting agency must delete it.

When the investigation is complete, the credit reporting agency must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the credit reporting agency cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the credit reporting agency gives you a written notice that includes the name, address, and phone number of the provider.

5. Fair and Accurate Credit Transactions Act of 2003 (FACTA)

The new Fair and Accurate Credit Transactions Act of 2003 (FACTA) has been approved by both Houses of Congress and was sent to President for his signature. It amends the current Fair Credit Reporting Act (FCRA) to "prevent identity theft, improve resolutions of consumer disputes, improve accuracy of consumer records, make improvements in the use of, and consumer access to credit information, and for other purposes."

Beginning January 01, 2004 the new provisions will make it easier for consumers in all fifty states to deal with their credit files. Among the new FACTA provisions are a free copy, annually upon request, of credit reports from each of the three credit reporting agencies (CRAs), disclosure of credit scores, which are used by lenders when making lending decisions and several identity theft measures including 'Fraud Alerts' in credit files.

Further, when requesting free credit reports, the law includes a provision whereby the CRA's must notify consumers of their right to get their credit scores and also include an explanation of factors that may have a negative affect on your score. Now consumers may dispute directly to the creditor and the CRA, plus creditors must notify a consumer whenever negative information is going to be sent to a CRA for inclusion in a credit file, reducing the number of inaccurate reports going into files because the consumer will know in advance. Now, consumers would know in advance if a lender was making a false report on a late pay or other delinquency, for instance, and therefore may dispute it directly before it hits a credit file.

Further, to help consumers who are actively shopping for a mortgage, automobile or other type of loan, avoid having an incredible number of inquiries on their credit reports as a result, would receive a special notification from the CRA that these inquiries are lowering the consumer's credit score. Here is a summary of the major amendments:

• Provide consumers with a free credit report every year.
• Give consumers the right to see their credit scores.
• Provide consumers with the ability to opt-out of information sharing between affiliated companies for marketing purposes.
• Ensure that consumers are notified if merchants are going to report negative information to the credit bureaus about them.
• Allow consumers to place "fraud alerts" in their credit reports to prevent identity thieves from opening accounts in their names, including special provisions to protect active duty military personnel.
• Allow consumers to block information from being given to a credit bureau and from being reported by a credit bureau if such information results from identity theft.
• Restrict access to consumers' sensitive health information.
• Provide consumers with one-call-for-all protection by requiring credit bureaus to share consumer calls on identity theft, including requested fraud alert blocking.
• Require creditors to take certain precautions before extending credit to consumers who have placed "fraud alerts" in their files.
• Stop merchants from printing more than the last five digits of a payment card on an electronic receipt.

Passed in December 2003; added new regulations for identity theft protections, data privacy and credit report access and allows consumers to request one free consumer disclosure (credit report) from each credit reporting agency once per year on-line and the "request one free credit report on-line" program rolls out in four stages, starting with the Western states on December 1. Free Annual Credit Reports are available at http://www.annualcreditreport.com

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Iron Mill News Service Credit News

Note: Send all debt settlement letters via "Certified Mail return receipt requested" and keep a copy for your records and send one copy to the original creditor.