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Message #609 Consumer rights: Credit reporting agencies

mp3 #609 Credit Reporting Agencies, What are Your Rights? (mp3 file)


If you've ever borrowed money or bought on credit there may be a file on you somewhere.

It contains information on open and closed charge accounts, loans, delinquent payments, paid accounts, and some public information such as tax liens, judgments and bankruptcies. This file is found in a consumer credit reporting agency - an organization which keeps credit records on many consumers.

Virtually every American city and town is serviced by one or more credit reporting agencies. A consumer credit reporting agency should not be confused with an investigation agency or a collection agency. A collection agency collects overdue accounts or bad debts for credit grantors. The agency usually receives a percentage of the amount collected as a fee.

Investigation agencies use investigators to gather and evaluate information for employment, insurance, and licensing purposes, or for a court order. An investigative report consists of information on a person's character, and lifestyle. This information is usually obtained through interviews with neighbors, friends, or associates, and from public records. If an investigative report is requested, the requesting institution must give you written notice no later than three days after the request is first made. An employer may request an investigative report only for employment purposes. You also have the right to visually inspect your file and have a copy of it for a fee. Or, if you make a written request with the proper identification, the agency must either send you a copy or give you this information over the phone, according to your written request. You also have a right to have the information reinvestigated if you feel it is wrong, and to file a statement of dispute of up to 100 words if you don't agree with the reinvestigation.

Consumer credit reporting agencies keep files on people called credit histories. These agencies are clearinghouses which collect, store, and give out information about your credit worthiness. They do not make recommendations or decisions for the credit grantor. Rather, they supply factual information to the credit grantor who then decides if you are a good or a bad credit risk.

Most lenders rate you in terms of the "three C’s of credit: character - your general reputation and your attitude toward paying bills; capacity - your ability to pay and your current income; and capital - information about your total assets. A decision to grant you credit is determined by how high you score in these three areas.

A credit report will usually contain:

  1. Exact identification information: your name, your spouse's name, your address, and social security number.
  2. Employment information: where you work, your job title, how long you have worked for your present employer, and your income (plus the same information for your spouse).
  3. Personal history: your date of birth, number of dependents, former employer, former address (moving habits), and Whether you own or rent your home.
  4. Credit history: shows in detail how you have paid each of your bills, the public records in your name at the courthouse, and whether you have ever been sued for a debt, filed a bankruptcy, or had a tax lien recorded against you.

Credit reports are used by credit unions, banks, and stores to check your credit history when you apply for credit. Businesses may subscribe to a credit reporting agency for a monthly fee of approximately $8. Usually $1.25 is charged to process the individual reports.

Apartment owners can also subscribe to credit reporting agencies. Since they use the service less frequently than banks or stores, they don't pay a monthly fee but pay a higher price for each individual report. Selected government agencies such as the VA and FHA also obtain credit reports.

Credit reporting agencies receive updated account information on a regular basis from their subscribers, the credit grantors.

Credit reporting agencies save the prospective credit grantor from going out and gathering the necessary information itself. The agencies pool the information together for their subscribers. Merely by placing a telephone call, the credit grantor can get much of the necessary information on a particular customer.

You should always be on the lookout for incorrect information in your file. Serious problems have resulted for individuals because of statements made about them by credit reporting agencies. It is not unheard of for credit reporting agencies to mix up people whose names are similar. Assuming you catch the error, it still may take a few years to fully clear up the mistake and in the meantime, the report follows you from one city to another.

The law protects you.

The Federal Fair Credit Reporting Act was enacted in 1971 and in 1975 California passed an even stronger law protecting you against certain credit reporting practices. Under the Fair Credit Reporting Act you can protect yourself if you have been denied credit, insurance or employment, or if you believe you have had difficulties because of a credit report on you. You have the right to:

1. Be told the name and address of the credit reporting agency responsible for preparing a credit report that was used to deny you credit, insurance, or employment, or to increase the cost of credit or insurance.

2. Be told the nature, substance and sources (except investigative type sources) of the information (except medical) collected about you by a credit reporting agency.

3. Take anyone of your choosing with you when you visit the credit reporting agency.

4. Get this information free of charge when you have been denied credit, insurance or employment within 60 days after being notified. Otherwise, the reporting agency can charge a reasonable fee for giving you the information.

5. Be told who has received a credit report on you within the preceding six months (or within the preceding two years if the report was furnished for employment purposes).

6. Have incomplete or incorrect information re-investigated, in most instances, and if the information is found to be inaccurate or cannot be verified, to have it removed from the file.

7. Have the agency notify those you name (at no cost to you) who have previously received the incorrect or incomplete information that the information has been deleted.

8. When a dispute between you and the reporting agency cannot be resolved, to have a 100-word statement of your version of the dispute placed in the file and included in subsequent credit reports.

9. Request the agency to send your version of the dispute to certain businesses for a reasonable fee.

10. Have your credit report withheld from anyone who under the law does not have a legitimate need for the information.

11. Sue a company for damages if it willfully or negligently violates the law and, if successful, to collect attorney's fees and court costs.

12. Not have most adverse information reported after seven years. One major exception is bankruptcy, which may be reported for 10 years.

In the past, a married woman has had difficulty establishing her own credit history. Traditionally, most credit cards and loans have been in the husband's name and recorded in his credit history. Although the wife may have used the credit card more often and may have been responsible for paying the bills, her responsibilities were never noted. So, the married woman who finds herself single again may be without a credit history, and as a result may be denied credit.

Married women can easily prevent this situation. Upon marriage, do not change all your bank and charge accounts from Miss Susan Brown to Mrs. David Lee. If you do, the credit history established as a single woman will be closed and all of your credit information will go into the file of David Lee. In order to keep your credit file in your own name and guarantee your continuing identity, only change the name on your credit accounts from Miss Susan Brown to Mrs. (or Ms.) Susan Lee.

The Equal Credit Opportunity Act ensures equal treatment in credit granting and reporting. For accounts opened since January 1, 1977, or upon request, credit reporting agencies are required to report the credit history of married persons separately.

If you have a problem,

1. You can find out if you have a credit history and what the file contains. Simply contact the credit department of the bank or store where you have a credit card and ask which credit reporting agency it uses. Credit reporting agencies in your community can also be located by consulting your phone book's "yellow pages" under headings such as "credit rating and reporting agencies." Contact the agency and ask to see your credit history. You can arrange for a personal interview at the agency's office or for a telephone interview. With the proper identification and for a charge of $8, you will be allowed to inspect your credit history file. (Some credit reporting agencies do not charge a fee if you are inquiring because of a disputed entry. If, for some reason, no credit history exists on you even though you have a credit card or have had a loan, contact the company with which you have credit. Ask it to contact its credit reporting agency and insist that the agency begin a credit history on you at once.

2. If you feel you have been unfairly rated a bad credit risk or have any other complaints concerning credit grantors, contact the Federal Trade Commission office in Los Angeles or San Francisco. The FTC will inform you of your rights and try to resolve any misunderstandings.

3. If you have a complaint against a credit reporting agency, you can also contact: Consumer Data Industry Association 1090 Vermont Avenue North West Suite 200 Washington, D.C. 20005-4905 (cdiaonline.org). Most credit reporting agencies are members of this association, which does not provide arbitration or mediation services, but it will offer suggestions on how to proceed to resolve your problem.

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