What Is In Your Credit Report

You may have looked at them a time or two but when was the last time you thoroughly checked your credit reports?  They seem intimidating and confusing to many people.  Millions of consumers suffer from bad credit and are afraid to look at their credit reports until they need them, and of course, then it is too late.

Your issues may be severe like a charge-off, collection account, tax lien, or judgment, or maybe your issues are minor like a few slow pays.  Whatever the case may be, there is a method to properly handle each one.  Remember, your objective is to bring your credit reports up to the best possible standard.  Any false promises of total guaranteed credit repair are just that - false.

Start simple.  Go over each credit report and review each section.  Your credit reports will contain generally the same information give or take a few items. 

Not all credit bureaus report every account.  Some creditors only report to one or two while others may report to all three.  This will be important later on when you begin learning how to dispute your credit.
Information in the credit report:

• Public records
• Tax liens
• Judgments
• Felonies
• Unpaid child support
• Bankruptcy records
• Credit history
• Date account opened
• Date account closed
• Balances owed
• Limits available
• Monthly payment history
• Status of account, i.e. current, charge-off, collections
• Inquiries - hard or soft
• Consumer statement (when requested)

You can see from the exhaustive list above that many factors go into your credit reports.  It's no wonder consumers are confused.  Each credit bureau has its own codes and layout.  All three credit bureaus display the information similarly but the coding may vary from bureau to bureau. 

Those codes mean a variety of things but the most common are as follows:
Common credit bureau codes:
R1- stands for current
R2 - stands for slightly delinquent, usually 30 days
R3 - stands for 60 days delinquent
R4 - stands for 90 days delinquent
R5 - stands for 120 days delinquent
R6 - stands for 180 days delinquent
R7 - stands for over 180 days delinquent
R8, R9 - stands for charge-off, collections, or repossession

You may also see the following codes, depending on the bureau:
C         Current
N         Current account/zero balance
0          Current account/zero balance
1          30 days past the due date
2          60 days past the due date
3          90 days past the due date
4          120 days past the due date
5          150 days past the due date
6          180 days past the due date
7          Making payments or paid under wage earner plan
8          Derogatory, repossession, foreclosure
9          Derogatory, collection, charge off

Credit Inquiries

What is a credit inquiry?
A credit inquiry is an item on a credit report that shows a business with a "permissible purpose" (as defined under the federal Fair Credit Reporting Act) has previously requested a copy of the report.

Not all credit inquiries count toward your FICO® score.

When you check your credit report, you may notice that a number of credit inquiries have been made, sometimes from businesses that you don’t know. But the only inquiries that count toward your FICO score are the ones that result from your applications for new credit.

• Inquiries that count toward your FICO score.
  There is only one type of credit inquiry that counts toward your FICO score. When you apply for a mortgage, auto loan or other credit, you authorize the lender to request a copy of your credit report. These types of inquiries, prompted by your own actions, appear on your credit report and are included in your FICO score.
  
  
• Inquiries that don’t count toward your FICO score.
  Your own credit report requests, credit checks made by businesses to offer you goods or services, or inquiries made by businesses with whom you already have a credit account do not count toward your FICO score. Credit checks by prospective employers also do not count. These types of inquiries may appear on your credit report, but they are not included in your FICO score.

Your FICO score is not affected when you check your credit.
Checking your credit reports regularly to be sure they are accurate and error-free is a good idea. In fact, maintaining accurate credit reports is a part of good credit management, which can help to improve your FICO scores over time.

You can order more than one of your credit reports with FICOscores right here at myFICO.com. Checking your score at myFICO does not count as an inquiry and will not hurt your FICO score.

How credit inquiries are factored into FICO scores.
There are five types of information used to calculate a FICO score at any given point in time. Each type of information counts as a percentage of a total FICO score:

These percentages are based on the importance of the five categories for the general population. For particular groups, such as people with relatively short credit histories, the importance of the categories may differ.

Inquiries are a subset of the "new credit" category shown above, which accounts for 10% of the total FICO score. Their importance depends on the overall information in your credit report. For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your score. What's important is the mix of information, which varies from person to person, and for any one person over time.
Inquiries may or may not affect your FICO score.

A FICO score takes into account only voluntary inquiries that result from your application for credit. The information about inquiries that can be factored into your FICO score includes:

• Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account.
• Number of recent credit inquiries.
• Time since recent account opening(s), by type of account.
• Time since credit inquiry(ies).

A FICO score does not take into account any involuntary inquiries made by businesses with whom you did not apply for credit, inquiries from employers, or your own requests to see your credit report.

For many people, one additional credit inquiry (voluntary and initiated by an application for credit) may not affect their FICO score at all. For most people, a credit inquiry will only decrease their FICO score by a few points.

Inquiries can have a greater impact, however, if you have few accounts or a short credit history. Large numbers of inquiries also mean greater risk: People with six inquiries or more on their credit reports are eight times more likely to declare bankruptcy than people with no inquiries on their reports.
What happens when you apply for credit.

When you apply for credit, you authorize the lender to ask for a copy of your credit report. This is how voluntary inquiries appear on your credit report.

The inquiries section of your credit report contains a list of everyone who accessed your credit report within the last two years. The report you see lists both voluntary inquiries, spurred by your own requests for credit, and involuntary inquiries, such as when lenders order your credit report to offer you a pre-approved credit card.

Will my FICO score drop if I apply for new credit?
If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple inquiries will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score.
What to know about "rate shopping."

Looking for a mortgage or an auto loan may cause multiple lenders to request your credit report, even though youre only looking for one loan. To compensate for this, the score ignores all mortgage and auto inquiries made in the 30 days prior to scoring. So if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for auto or mortgage inquiries older than 30 days. If it finds some, it counts all those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.

Improving your FICO score.
If you need a loan, do your rate shopping within a focused period of time, such as 30 days. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
Generally, people with high FICO scores consistently:

• Pay bills on time.
• Keep balances low on credit cards and other revolving credit products.
• Apply for and open new credit accounts only as needed.

Also, here are some good credit management practices that can help to raise your FICO score over time.

• Re-establish your credit history if you have had problems. Opening new accounts responsibly and paying them on time will raise your FICO score over the long term.
• Check your own credit reports regularly, and before applying for new credit, to be sure they are accurate and up-to-date. As long as you order your credit reports through an organization authorized to provide credit reports to consumers, such as myFICO, your own inquiries will not affect your FICO score.


Want to dispute mistakes on your credit report? We can help you ! Just call us at 718-486-4700

How Credit Report Mistakes Are Made

When a credit report contains errors, it is often because the report is incomplete, or contains information about someone else. This typically happens because:

The person applied for credit under different names (Robert Jones, Bob Jones, etc.).
Someone made a clerical error in reading or entering name or address information from a hand-written application.
The person gave an inaccurate Social Security number, or the number was misread by the lender.
Loan or credit card payments were inadvertently applied to the wrong account.

Want to dispute mistakes on your credit report? We can help you ! Just call us at 718-486-4700

What is in Your FICO Score

FICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below. The percentages in the chart reflect how important each of the categories is in determining your FICO score.

These percentages are based on the importance of the five categories for the general population. For particular groups - for example, people who have not been using credit long - the importance of these categories may be somewhat different.

Payment History

• Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
• Presence of adverse public records (bankruptcy, judgements, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
• Severity of delinquency (how long past due)
• Amount past due on delinquent accounts or collection items
• Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any)
• Number of past due items on file
• Number of accounts paid as agreed

Amounts Owed

• Amount owing on accounts
• Amount owing on specific types of accounts
• Lack of a specific type of balance, in some cases
• Number of accounts with balances
• Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
• Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)

Length of Credit History

• Time since accounts opened
• Time since accounts opened, by specific type of account
• Time since account activity

New Credit

• Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
• Number of recent credit inquiries
• Time since recent account opening(s), by type of account
• Time since credit inquiry(s)
• Re-establishment of positive credit history following past payment problems

Types of Credit Used

• Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)

Please note that:

• A FICO score takes into consideration all these categories of information, not just one or two.
  No one piece of information or factor alone will determine your score.
• The importance of any factor depends on the overall information in your credit report.
  For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your FICO score. Thus, it's impossible to say exactly how important any single factor is in determining your score - even the levels of importance shown here are for the general population, and will be different for different credit profiles. What's important is the mix of information, which varies from person to person, and for any one person over time.
• Your FICO score only looks at information in your credit report.
  However, lenders look at many things when making a credit decision including your income, how long you have worked at your present job and the kind of credit you are requesting.
• Your score considers both positive and negative information in your credit report.
  Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your FICO credit score.

What is Not in Your FICO Score

FICO scores consider a wide range of information on your credit report. However, they do not consider:

• Your race, color, religion, national origin, sex and marital status.
  US law prohibits credit scoring from considering these facts, as well as any receipt of public assistance, or the exercise of any consumer right under the Consumer Credit Protection Act.
• Your age.
  Other types of scores may consider your age, but FICO scores don't.
• Your salary, occupation, title, employer, date employed or employment history.
  Lenders may consider this information, however, as may other types of scores.
• Where you live.
• Any interest rate being charged on a particular credit card or other account.
• Any items reported as child/family support obligations or rental agreements.
• Certain types of inquiries (requests for your credit report).
  The score does not count “consumer-initiated” inquiries – requests you have made for your credit report, in order to check it. It also does not count “promotional inquiries” – requests made by lenders in order to make you a “pre-approved” credit offer – or “administrative inquiries” – requests made by lenders to review your account with them. Requests that are marked as coming from employers are not counted either.
• Any information not found in your credit report.
• Any information that is not proven to be predictive of future credit performance.
• Whether or not you are participating in a credit counseling of any kind.

How Credit Scoring Helps You

Credit scores give lenders a fast, objective measurement of your credit risk. Before the use of scoring, the credit granting process could be slow, inconsistent and unfairly biased.
Credit scores – especially FICO® scores, the most widely used credit bureau scores – have made big improvements in the credit process. Because of credit scores:

• People can get loans faster.
  Scores can be delivered almost instantaneously, helping lenders speed up loan approvals. Today many credit decisions can be made within minutes. Even a mortgage application can be approved in hours instead of weeks for borrowers who score above a lender's “score cutoff”. Scoring also allows retail stores, Internet sites and other lenders to make “instant credit” decisions.
• Credit decisions are fairer.
  Using credit scoring, lenders can focus only on the facts related to credit risk, rather than their personal feelings. Factors like your gender, race, religion, nationality and marital status are not considered by credit scoring.
• Credit “mistakes” count for less.
  If you have had poor credit performance in the past, credit scoring doesn't let that haunt you forever. Past credit problems fade as time passes and as recent good payment patterns show up on your credit report. Unlike so-called “knock out rules” that turn down borrowers based solely on a past problem in their file, credit scoring weighs all of the credit-related information, both good and bad, in your credit report.
• More credit is available.
  Lenders who use credit scoring can approve more loans, because credit scoring gives them more precise information on which to base credit decisions. It allows lenders to identify individuals who are likely to perform well in the future, even though their credit report shows past problems. Even people whose scores are lower than a lender's cutoff for “automatic approval” benefit from scoring. Many lenders offer a choice of credit products geared to different risk levels. Most have their own separate guidelines, so if you are turned down by one lender, another may approve your loan. The use of credit scores gives lenders the confidence to offer credit to more people, since they have a better understanding of the risk they are taking on.
• Credit rates are lower overall.
  With more credit available, the cost of credit for borrowers decreases. Automated credit processes, including credit scoring, make the credit granting process more efficient and less costly for lenders, who in turn have passed savings on to their customers. And by controlling credit losses using scoring, lenders can make rates lower overall. Mortgage rates are lower in the United States than in Europe, for example, in part because of the information - including credit scores - available to lenders here. Knowing and improving your score can also lead to more favorable interest rates

How To Protect Yourself Now

There’s a lot of advice about how to deal with identity theft around these days - some helpful, some unrealistic, and some a little ridiculous. We’ve done the research for you and present the following easy-to-do, indispensable steps. These items should be considered MUST-DOs if you’re serious about minimizing the effect identity theft can have on your life.

1. Don’t leave printed personal and/or financial information lying around at home.
   This is a no-brainer, right? Yet more often than not, identity thieves are friends or relatives of the victim who get their personal information offline – not electronically. Keep checkbooks, social security information, billing information, and anything else a thief could use to steal your identity out of sight and secure.
   
   
2. Minimize the risks posed by mail theft.
   Shred bank and credit statements and credit card offers by hand before throwing them away. Even better, get a crosscut shredder. Don’t mail checks from your home mailbox. Instead, drop them off at a U.S. Mailbox or the U.S. Post Office. Also, have new checks delivered to your bank, not your home.
   
   
3. Get and review your bank statements electronically.
   View your personal finance statements electronically at least twice a month. By doing this, you will spot a fraud much sooner if it happens. Catching a fraud early minimizes the damage thieves can do and usually results in less time and money spent resolving problems.
   
   
4. Subscribe to a service that will provide you with a copy of one of your credit reports and FICO® scores on a regular basis.
   By monitoring your report and your FICO score for any changes you can’t account for, you’ll know if someone has applied for credit in your name.
   
   
5. Check and review all three of your FICO scores and credit reports at least once a year.
   When you look at your reports, make sure you recognize all the account information listed. If you see anything you can’t account for, get to the bottom of it as soon as you can. As with electronic statements, checking your FICO scores and credit reports is one of the most sure-fire ways to spot a fraud quickly and minimize any damage done.
   
   
6. Avoid giving out your Social Security number whenever possible.
   Your SSN is the key to your credit reports and banking accounts and is the prime target of criminals. Anyone who already has your social security number (along with other information) already poses a risk: your doctor’s office, accountants, lawyers, loan officer, health insurance, schools, courts, etc. Shady employees at any of these places could steal your identity, so be very choosy about to whom you entrust it in the future. Never put your social security number on your checks or your credit receipts. If a business requests your SSN, ask to give them an alternate number (such as a driver’s license) instead and tell them why. If a government agency requests your social security number, there must be a privacy notice accompanying the request.
   
   
7. Secure your home computer.
   Install a firewall and buy virus-protection software, and if you dispose of a PC, remove your data with a “wipe” utility program (erasing files manually isn’t the same thing).
   
   
8. Be smart about choosing passwords.
   When choosing passwords, assume that someone already has a bunch of your personal information and is trying to break into your accounts. Don’t use the same password for all your accounts. Avoid using your SSN (or even a part of it), you or your mom’s maiden name, birth date, middle name, pet’s name or consecutive guessable numbers for passwords. If you have trouble remembering hard-to-guess passwords, write them down and keep them somewhere secure – hide them in a locked drawer, for example. It’s a bit of a hassle, but it’s nothing compared to having your identity stolen.

Signs of Identity Theft to watch out for

1. Unexpected phone calls from creditors.
   If you get a call from a creditor demanding payment for a purchase no one in your family can account for have the caller give you all the information possible and investigate.
   
   
2. Strange credit card charges.
   It’s easier to spot these if you keep all your receipts and reconcile them with your statements each month.
   
   
3. Getting turned down for credit unexpectedly.
   This is one of the more common ways victims discover they’ve been victimized – don’t be one of them. Subscribe to a service that will provide you with a copy of one of your credit reports and FICO scores on a quarterly basis.
   
   
4. Account usernames and passwords or ATM PINs stop working.
   This suggests that an identity thief may have changed your access codes.
   
   
5. Missing bills
   If you’re used to getting billed for services you subscribe to and the bills stop arriving, it could mean an identity thief has changed your address in order to use bank accounts without raising suspicion.
   
   
6. Strange information in your files.
   If information in a personal file definitely does not match up with you, it could be simply a case of mistaken identity – or it could be more than an innocent mistake. One way to help avoid mistaken identity problems is to use your middle name or middle initial on applications to help distinguish you from others who have the same name.

What to do if Identity theft strikes

1. Call the credit bureaus and get their help.

TransUnion Fraud Assistance Department: 800-680-7289

Call the number above. In 24 hours or less, a fraud alert will be put on all your credit reports, alerting creditors to call for permission before opening any accounts in your name. Unfortunately, creditors aren’t required by law to pay attention to fraud alerts, so you’ll have to check your credit reports frequently to make sure no new accounts are opened. If you live in California, Texas, Louisiana, or Vermont, however, you do have the right to put a credit freeze on your account – this will stop any attempt to open new accounts in your name. When you get your credit reports, make a note of your account number – you’ll need it when you talk to the agencies. Also, add a victim’s statement to each of your credit bureau reports asking creditors to contact you in person to verify all applications made in your name.

1. Lock thieves out of your accounts by changing all your account access information.
   Change your account passwords to something unguessable. Contact your banks and have them help you obtain new account numbers for all your accounts. Pick a new PIN number for ATM and debit cards. Close all credit card accounts and reopen them with new account numbers. You may want to contact the Social Security Administration at 800-772-1213 to get a new SSN. You also may want to contact your telephone, long distance, water, gas and electrical companies to alert them that someone may try to open an account in your name. You may need to change your driver’s license number if someone is using yours as an ID – go to the Department of Motor Vehicles to get a new number. Contact telephone and utility companies to prevent an ID thief from using a utility bill as proof of residence when applying for new credit.
   
   
2. Report the crime to all relevant authorities.
   Call your local police department. Make sure the police report lists all fraudulent accounts. Give as much information as possible. Get a copy of the police report and send it to the creditors and credit-reporting agencies as proof of the crime. Notify the Postal Inspector if you suspect mail theft. Contact the FTC at (877) 438-4338. Fill out the ID Theft Affidavit at the FTC’s Web site, make copies and send to creditors. The agency also has an online complaint form. While their investigators only tend to pursue larger fraud cases, the FTC does monitor all levels of identity theft crimes to find patterns and breaking up bigger identity theft rings. Notify the Office of the Inspector General if your social security number has been used fraudulently. Request a copy of your Personal Earnings and Benefits Statement and check it for accuracy.
   
   
3. Report all fraudulent transactions to creditors.
   Contact creditors for any accounts that have been tampered with or opened without your knowledge. Be sure to put your complaints in writing. Ask each creditor to provide you and your investigating law enforcement agency with copies of the documents showing fraudulent transactions. You may have to fight to get this documentation, but don’t give up. You’ll need these to help track down the perpetrator.
   
   
4. Keep a log of everything you do to resolve problems.
   Finally, create a log of all the contacts you make with authorities regarding the matter. Write down each person’s name, title, and phone number in case you need to re-contact them or refer to them in later correspondence.

Avoiding Credit and Charge Card Fraud

A thief goes through trash to find discarded receipts or carbons, and then uses your account numbers illegally.

A dishonest clerk makes an extra imprint from your credit or charge card and uses it to make personal charges.

You respond to a mailing asking you to call a long distance number for a free trip or bargain-priced travel package. You're told you must join a travel club first and you're asked for your account number so you can be billed. The catch! Charges you didn't make are added to your bill, and you never get your trip.

Credit and charge card fraud costs cardholders and issuers hundreds of millions of dollars each year. While theft is the most obvious form of fraud, it can occur in other ways. For example, someone may use your card number without your knowledge.

It's not always possible to prevent credit or charge card fraud from happening. But there are a few steps you can take to make it more difficult for a crook to capture your card or card numbers and minimize the possibility.

Guarding Against Fraud

Here are some tips to help protect yourself from credit and charge card fraud.
Do:

• Sign your cards as soon as they arrive.
• Carry your cards separately from your wallet, in a zippered compartment, a business card holder, or another small pouch.
• Keep a record of your account numbers, their expiration dates, and the phone number and address of each company in a secure place.
• Keep an eye on your card during the transaction, and get it back as quickly as possible.
• Void incorrect receipts.
• Destroy carbons.
• Save receipts to compare with billing statements.
• Open bills promptly and reconcile accounts monthly, just as you would your checking account.
• Report any questionable charges promptly and in writing to the card issuer.
• Notify card companies in advance of a change in address.

Don't:

• Lend your card(s) to anyone.
• Leave cards or receipts lying around.
• Sign a blank receipt. When you sign a receipt, draw a line through any blank spaces above the total.
• Write your account number on a postcard or the outside of an envelope.
• Give out your account number over the phone unless you're making the call to a company you know is reputable. If you have questions about a company, check it out with your local consumer protection office or Better Business Bureau.

Reporting Losses and Fraud

If you lose your credit or charge cards or if you realize they've been lost or stolen, immediately call the issuer(s). Many companies have toll-free numbers and 24-hour service to deal with such emergencies. By law, once you report the loss or theft, you have no further responsibility for unauthorized charges. In any event, your maximum liability under federal law is $50 per card.
If you suspect fraud, you may be asked to sign a statement under oath that you did not make the purchase(s) in question.

Credit Reports know your rights

Your credit payment history is recorded in a file or report. These files or reports are maintained and sold by credit bureaus. You have a credit record on file at a credit bureau if you have ever applied for a credit or charge account, a personal loan, insurance, or a job. Your credit record contains information about your income, debts, and credit payment history. It also indicates whether you have been sued, arrested, or have filed for bankruptcy.
The Fair Credit Reporting Act (FCRA) is designed to help ensure that credit bureaus furnish correct and complete information to businesses to use when evaluating your application.
Your rights under the Fair Credit Reporting Act:

• You have the right to receive a copy of your credit report. The copy of your report must contain all of the information in your file at the time of your request.
   
• You have the right to know the name of anyone who received your credit report in the last year for most purposes or in the last two years for employment purposes.
   
• Any company that denies your application must supply the name and address of the credit bureau they contacted, provided the denial was based on information given by the credit bureau.
   
• You have the right to a free copy of your credit report when your application is denied because of information supplied by the credit bureau. Your request must be made within 60 days of receiving your denial notice.
   
• If you contest the completeness or accuracy of information in your report, you should file a dispute with the credit bureau and with the company that furnished the information to the bureau. Both the credit bureau and the furnisher of information are legally obligated to investigate your dispute.
   
• You have a right to add a summary explanation to your credit report if your dispute is not resolved to your satisfaction.