Credit Files: What Do They Really Tell?
Many Americans never overspend and take great pride in paying their bills on time. When they apply for credit, such as a mortgage, however, they may discover some shocking news: A credit report indicating seriously delinquent bills.
Most individuals never give a second thought to the mounds of financial paperwork and personal history that are accumulating in the files of consumer reporting agencies. Then a crisis occurs. Perhaps it is an unexpected denial on a credit card or auto loan, a refusal on an apartment, or an insurance premium increase. The Fair Credit Reporting Act of 1970 provides a measure of control over the harm third-party reports can do. Specifically, consumers must be told at their request what their files contain, and inaccurate information must be deleted or corrected.
Two kinds of agencies prepare reports on consumers, and the law covers both. Credit bureaus collect objective financial data for use by bankers, retailers, credit card issuers, and landlords. A spokesman for TRW Information Services (one of the largest sources of consumer credit information with files on hundreds of millions of people in all fifty states, making it an industry leader in credit reporting) suggests that credit reports contain a great deal of sensitive information.
Data in a typical file is provided by creditors and gleaned from public records; it includes tax liens, bankruptcy information, outstanding loans, and details of credit card history, including the credit limit on each card, purchases, balances, and payment record. TRW’s role is to compile this data.
Those who are worried about the reliability of all this evidence, can learn what’s in a credit file or investigative report for a nominal fee, usually about $20. A bank or the yellow pages can tell which credit bureaus conduct business in the area.
The companies that commission an investigative report must inform the subject of the report when one has been done. Discovering which agency prepared the report is a simple matter of asking the company that made the request. If a report jeopardizes credit approval or a loan, the applicant has the right to know the “nature and substance” of the information at no cost.
The creditor desiring the information must disclose which firm prepared the report, including its address. Should there be incorrect information, the agency has to reinvestigate and confirm it, correct it, or delete it.
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