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What is a credit rating and why is it so important?
What is a credit bureau?
Can I see this credit report?
Why should I obtain a copy of my credit report?
What is identity theft, and why should I worry? I’m only a student.
Who can see my credit report?
How do I go about obtaining a copy of my credit report?
Can I contact just one of the credit reporting agencies?
What is “universal default” and why should I worry about it?
What if the information is incorrect?
What if the information is correct? How long is negative information kept on my credit report?
I’ve heard of something called a credit score. What is that?
I heard that whenever someone, including myself, checks my credit report, it causes my credit score to go down. Is this true?
What is a credit rating and why is it so important?
A credit rating is a measure of your credit worthiness. It is based on your credit file which is a record of your bill-paying habits provided by creditors and information from courthouse files such as filings for divorce, declaring bankruptcy, and any judgments against you for not paying debt. A summary of your credit history and credit worthiness, called a credit report, is prepared and sent to legitimate inquirers. Increasingly, lenders are using what is called a “credit score.” See FAQ below for information on this.
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What is a credit bureau?
The credit bureaus maintain the data in the credit files. Credit bureaus sell this information to creditors, insurance companies, prospective lenders and employers. There are three major credit reporting agencies: Experian, TransUnion and Equifax.
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Can I see this credit report?
You are entitled to know what’s in your credit report. As a result of the Fair Credit Reporting Act, copies of your credit report are now available at no charge. Order a free copy from each of the three credit bureaus once in a 12-month period by contacting AnnualCreditReport.com by telephone, mail or by using their web site www.annualcreditreport.com. You may order additional copies for around $9.50 unless you are denied credit, employment, housing or insurance based on a credit report.
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Why should I obtain a copy of my credit report?
It is a good idea to get a copy of your credit report to review the information. There may be inaccurate information that needs to be corrected. If there are inaccuracies, you should dispute them and get them corrected. Obtaining a copy of your credit report is also important in avoiding identity theft, a growing problem among college students.
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What is identity theft, and why should I worry? I’m only a student.
Identity theft is growing rapidly in the United States. Research estimates that almost 10 million Americans were victims of some sort of identity theft in the last year alone. Identity theft occurs when someone steals your personal information - such as your social security number, credit card number or online password - and uses it to commit fraud. Identity theft can cause significant damage to your credit standing, which can take months or even years to straighten out. Find out why students are an identity thief’s dream.
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Who can see my credit report?
The Fair Credit Reporting Act stipulates that a Credit Reporting Agency (CRA) may provide information about you only to people with a recognized need - typically includes the consideration of an application to a creditor, insurer, employer, landlord or other business. However, your written consent is required for reports provided to employers, or prospective employers, or reports that contain medical information. Additional information on consumer rights can be found as well as the Federal Trade Commission website.
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How do I go about obtaining a free copy of my credit report?
It is much easier now for consumers to obtain copies of their credit report. You can now order your free annual credit report online at www.annualcreditreport.com, or you can call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Before you can have access to your report, you must verify that you are the individual whose name is on the file. You will need to provide your name, address, Social Security number, and date of birth. To verify your identity, you may need to provide some information that only you would know, like the amount of your monthly mortgage payment.
Beware of imposter sites! They may try and sell you unwanted services.
Remember - for your FREE copy go to this website. It is the only website authorized to fill orders for the FREE annual credit report you are entitled to under law.
www.annualcreditreport.com
For additional copies beyond the one free copy per year, or to get your credit score (not a free service), contact the three major credit bureaus directly.
Equifax
www.equifax.com
800-685-1111
Experian
www.experian.com
888-397-3742
Trans Union
www.transunion.com
800-888-4213 OR 440-779-7200
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Can I contact just one of the credit reporting agencies?
It is important that you obtain and review a copy of your credit report from each of the three major credit reporting agencies once a year to make sure your information is accurate.
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What is “universal default” and why should I worry about it?
The ‘universal default’ clause is typically included in most credit card agreements (usually in fine print). Let’s say you have excellent credit, and pay bills on time. However, suddenly a negative item appears on a report, though error or a missed payment. When this type of thing happens, the ‘universal default’ clause is often invoked. Essentially it means if you are in default with one lender, you are in default with others too. As a result your interest rate will increase, sometimes may even double or triple.
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What if the information is incorrect?
Because your credit rating can positively or negatively impact your application for a loan, credit, insurance, housing or employment, you want the information in your credit file to be accurate and up to date. You have a right to dispute inaccurate info on your credit report. You can send in your dispute by mail or on line at each of the three credit reporting agencies. You will need to have available your name, social security number, date of birth, home phone number, current address, employer’s name, name of the company the dispute is with, the account number of disputed number, reason for the dispute, and any corrections to your personal information. Additional information on disputing errors in your credit report is available online through the Federal Trade Commission. Another source of information is on TransUnion’s TrueCredit website.
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What if the information is correct? How long is negative information kept on my credit report?
TransUnion (TrueCredit Learning Center) provides a good amount of information on this through their Expiration Guide. Generally negative information will stay on your credit report up to seven years. This includes late payments (over 30 days), collection accounts, charge-off accounts. Bankruptcies will remain on your credit report for 7 – 10 years.
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I’ve heard of something called a credit score. What is that?
Credit scores are complex systems creditors use to determine your credit worthiness. After collecting lots of information about you from different sources, the creditor uses a statistical program to compare you against others with a similar profile. Points are awarded for each factor that can help predict who is most likely to repay a debt. The points add up to a total score. Your credit report is a very important part of what makes up the credit score, so it is essential to protect your credit standing by paying bills on time, paying off outstanding balances, and not taking on more debt. According to TransUnion, “if your credit score is above 650 you will probably qualify for a standard loan. Under 650, you may have trouble receiving new credit.” The Federal Trade Commission is an excellent source of information on this. Another source from TransUnion TrueCredit. In order to obtain your credit score, you will need to contact the three credit bureaus directly. Unlike the credit report, this service is not free. You can also purchase your credit scores when ordering your free annual credit reports.
Equifax
www.equifax.com
800-685-1111
Experian
www.experian.com
888-397-3742
Trans Union
www.transunion.com
800-888-4213 OR 440-779-7200
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I heard that whenever someone, including myself, checks my credit report, it causes my credit score to go down. Is this true?
When a potential lender pulls your credit report for the purpose of extending credit (credit cards, car loan, alternative school loans), a “hard inquiry” results. This does decrease your credit score, and if there are several of these types of inquiries, it can be significant. TransUnion reports that each hard inquiry can cause up to a 5 point drop in your credit score. These remain on your credit report for 2 years. However, when you check your own credit report or an employer checks it, this causes a “soft inquiry,” which is not reported to lenders and does not decrease your credit score.
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Financial information about collection accounts, bankruptcies, repossessions and charge-offs will remain on your credit report for 7-10 years after they are first posted.
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