Credit Repair: What is a Credit Report Anyway?

Understanding your credit report and credit score can help you manage and improve your credit situation.  By knowing what affects your credit report and credit scores, you will be able to take positive actions that may lower your credit risk and increase your credit score.

There are three major credit bureaus: Equifax, TransUnion, and Experian. Together, these three bureaus compile and maintain credit files on nearly 90 percent of adults in the United States.

A common public misperception is that these bureaus are government agencies or extensions of the federal government.  In fact, the bureaus are private, for-profit companies that gather your credit history information and sell it to businesses that are legally permitted to see your report.  The businesses allowed to request your credit report include creditors such as banks and credit unions, credit card companies, mortgage lenders, and retail stores, in addition to employers, landlords, and insurance companies.

A consumer credit report is a document prepared by the credit bureaus that provides the following: Personal Information, Credit History, Public Records (bankruptcy, judgments, etc.), and Inquiries.  Other than inquiries, all of the above information remains on your credit report for seven to ten years.  This information is documented and sold to current and/or potential lenders, employers, landlords, and insurance agents for the purpose of providing the consumer’s payment history and credit worthiness.

Based upon the Fair Credit Reporting Act, credit grantors are permitted to review your credit report to objectively determine your credit worthiness.  There are 190 million credit active people in the United States who have a credit file, meaning they have applied for credit in some form since they were eighteen.   As consumers pay their bills, most lenders report the payment and account information to at least one of the three credit bureaus.  However, a recent study shows that up to 79% of all credit reports contain inaccuracies.

While a bankruptcy, judgment, or late payments can lower your credit score pretty quickly, improving your score takes time.  It is best if you check your credit scores and credit reports at least every 6-12 months, especially prior to applying for a loan.  This way, you have no surprises when a potential lender views your report. You’ll have time to work on improving any inaccuracies on your credit report and work to increase your credit score, if needed.


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