Your credit report is a file on you that includes your personal information, credit inquiries, credit accounts’ history, and public records of bankruptcies.
Your creditors and lenders report this information on to the three main credit bureaus of Experian, Equifax, and TransUnion. They then use it to compile your FICO score or Vantage Score so that other lenders will be able to learn all about how creditworthy you are.
While every one of these three credit reporting bureaus reports and formats your personal information in their own way, your reports will more or less have the identical groupings of information (if arranged differently). It is grouped in one of four categories. These categories include your identifying personal information, credit accounts, inquiries for credit, and public records (bankruptcies).
Personally Identifying Information
Under the category of personally identifying information you will find your name, date of birth, address, Social Security number, and at least some employment information. The credit reporting bureaus uses this to be able to identify you. None of this information feeds into your credit scores.
The updates in this information are derived from all credit applications you provide to lenders and creditors when you apply for any new credit.
It is crucial that you make sure the bureaus have correct identifying information on you. In particular if you see incorrect addresses that you do not recognize, this could be a troubling sign that a fraudster is targeting your individual identity for his own personal gain. You do not need to worry if all of your employers are not listed here, as none of this information has any bearing on your credit report or score.
Your various lenders and creditors will faithfully report your payment status on every account that you have opened with them. This will include the kind of account it is (whether mortgage, car loan, credit card, or other), the date of account opening, your loan amount or credit limit, your current account balance and history of payments, and whether or not you always make your payments in a timely fashion.
The two components of your credit score in this section include payment history (35 percent of your score) and credit utilization (30 percent). Between them, they amount to nearly two-thirds of your entire credit score calculation, making the information in this section the most critical for your credit score.
Be sure to keep your accounts in good standing and to keep an eye on this section for any mistakes or inaccuracies that can negatively impact your credit.
The two primary kinds of accounts listed here will be revolving accounts and instalment loans. The revolving accounts are your typical credit cards that allow you to use, pay down, and re-use your credit limits. The instalment loans are the ones that pay out a lump sum amount upfront (for a car purchase as an example) then you pay them down according to fixed, scheduled monthly payments.
This section will also provide key information on whether the accounts are open or closed. If the account is closed, it will give the information on who closed the account and the reason why. You should also check this information carefully on a regular basis too, as a mistaken reason for closing one of your accounts by your creditor could cost you points from your credit score.
Collection accounts are also listed in this section on your credit report. You want to avoid any of these if at all possible. When you fall behind on a credit or other revolving account by 180 days, the creditor will typically charge this account off and send it out for collections. The date of original delinquency and the collection company name will appear here along with the original debt amount.
This information remains on your credit reports for seven years and does great harm to your score. It can easily cost you 100 points so make every effort to keep past due accounts out of collection status.
This third section of your credit report reveals your recent attempts to obtain credit to the bureaus. Any of your recent loan applications or credit card applications will show up here in the form of a hard inquiry, listing the name and date of the creditor who pulled your credit in support of an application. Because you have authorized the lender to receive a copy of your credit report, it will appear under credit inquiries.
This section maintains a full list of all companies who scrutinized your personal credit report over the past two years. It will not only show the hard inquiries, but also the soft inquiries (as when you receive pre-approved credit offers or check your own credit through a third party service like Credit Karma).
Lenders are only able to see the hard hits on your credit report. The soft hits are information only available to you personally. The good news is that these soft hits do not have any impact on your FICO or Vantage Scoring scores. You should be wary of too many hard hits at once though, as these depict you to be a higher credit risk to lenders and creditors. Too many hard inquiries will certainly cause your score to drop.
In an unusual move back in 2017 and 2018, the credit bureaus worked together to provide some relief to consumers. They stopped recording all public records debts except for bankruptcies. Public and private judgments and liens (even tax liens) no longer show up in your public records section on your report, nor do any of the debts associated with these.
Bankruptcies still remain on your credit report from seven to 10 years from date of resolution.
Medical debts are part of the data that the credit bureaus have expunged back in 2017 and 2018. Medical bills on which you are behind will no longer show on your credit report nor impact your credit score any more. This is good news for many people, and it actually improved the scores of around six percent of consumers when it went into effect.
This change does not stop collectors and medical billing companies from trying to collect the debts you owe them however.
The Use of Section 809
Section 809 is an important part of the Fair Debt Collection Practices Act. It deals with the right to dispute debt collections by a consumer. You have the right to contact a collector regarding their attempts to collect a debt and request that they send you all of the important information concerning the debt.
The creditor must notify you in writing of all of the following:
- The total debt amount
- The creditor’s name to whom you owe the debt
- A statement giving you 30 days from the receipt of the notice to dispute the debt’s validity, otherwise the debt is reaffirmed by you.
- Another statement that declares if you write to dispute the debt, the collector will have to verify the judgment or debt against you and furnish you with a copy of this judgment or verification by mail
- A final statement that the collector will furnish you with the original creditor’s name and address if it is different from the present creditor. They must do this within 30 days of receiving your request
Requesting information and verification of a debt (effectively disputing it) from the collector forces them to stop all efforts to collect on the debt up to the point that they get the verification of the debt or copy of the associated judgment.
They must then mail the name and address of the original creditor along with verification of the debt to you before they can resume any collection activities. If you do not dispute the debt’s validity, you do not waive your rights to do this in the future.
Failing to do so will not be construed as admission of debt liability.