Home > Articles

This chapter is from the book

This chapter is from the book

Running Your Own Credit Report

The infamous credit report. Credit-reporting agencies maintain files on millions of borrowers, including you and me. Lenders making credit decisions buy credit reports on their prospects, applicants, and customers from credit-reporting agencies. Your credit report details your credit history as it has been reported to the credit-reporting agency by lenders who have extended credit to you. Your credit report lists what types of credit you use, the length of time your accounts have been open, and whether you’ve paid your bills on time. It tells lenders how much credit you’ve used and whether you’re seeking new sources of credit. These reports give lenders a broader view of your credit history than do other data sources, such as a bank’s own customer data.

Your credit report reveals many aspects of your borrowing activities. All pieces of information should be considered in relationship to other pieces of information. Credit scoring is useful because it makes it possible to consider all this information quickly, fairly, and consistently.

Where to Find Your Credit Reports

Under the Consumer Reporting Act, you’re entitled to a copy of all the information a credit bureau has on you. You need to find out what credit bureaus are telling people about you and find out who has been asking. Credit bureaus are not consumer friendly. They exist to protect businesses and banks from consumers. To do this, they calculate a credit score. This score is based on all the information in your credit report: history, late payments, paying ahead, amount of credit, over what period of time, and so forth.

The most common credit score is the FICO score, and lenders base their approval on this score. You have three FICO scores, one for each credit bureau, and you can get all three scores from myFICO (http://www.myfico.com). For more information, go to the myFICO site, or contact each credit bureau individually:

Understanding Your FICO Score

Credit bureau scores are often called "FICO scores" because most credit bureau scores used in the United States and Canada are produced from software developed by Fair Isaac Corporation (FICO). The three major credit-reporting agencies—Equifax, Experian, and TransUnion—provide FICO scores to lenders.

FICO scores give lenders the best guide to future consumer risk, based solely on credit report data. The higher the score, the lower the risk. No score says whether a specific person will be a "good" or "bad" customer, however. And although many lenders use FICO scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable for a given credit product. There’s no single "cutoff score" used by all lenders. The major score categories are below 620, 620 to 690, 690 to 740, 740 to 780, and above 780, with each category containing about 20% of the total overall U.S. population. The average score that’s also considered a good score is 690 to 740.

Depending on your FICO score, you’re loaned what is called "hard" or "soft" money. You get hard money when your credit is bad and your interest rate is high, and soft money when your credit is good and you can secure a lower interest rate. Table 3.1 shows the difference between hard and soft money.

How Your FICO Score Relates to Your Loan

Your FICO Score

Your Interest Rate

Your Monthly Payment

720–850

5.56%

$858

700–719

5.69%

$869

675–699

6.23%

$921

620–674

7.38%

$1,036

560–619

8.53%

$1,157

500–559

9.29%

$1,238


As you can see by this table, a difference of 161 points on your FICO score can mean the difference between 5.56% and 9.29% annual percentage rate (APR), or an increase in your monthly payment by $380 per month. If you paid this higher rate over the life of a 30-year loan, it would cost you $136,800—certainly reason enough to clean up your credit report.

How to Clean Up Your Credit Report

Now that you know about credit reports, how’s your credit rating? Is your credit report accurate? Probably not. You need to check your credit report once a year or at least before you go to a lender to get prequalified for a loan, whether it’s for a home, car, boat, whatever. Your credit report affects your interest rate and your monthly loan payment.

Credit reports can contain errors, often because the report is incomplete or contains information about someone else. Typically, these errors happen because you applied for credit under different names (using both Robert Jones and Bob Jones, for example), someone made a clerical error in reading or entering a name or address from a handwritten application, your social security number is wrong because of a typo or the lender misread the number, or loan or credit card payments were inadvertently applied to the wrong account.

A good credit score is important to you during the prequalification process because a better score gets you better interest rates. Better interest rates lower the amount of money you have to pay back and lower your monthly payment. This decrease can mean hundreds of dollars less you pay each month or hundreds more square feet in your new house.

I don’t want to scare you with all this intimidating information without giving you at least a small ray of sunshine. Forget all the horror stories you’ve heard about cleaning up your credit report. A miracle has happened: Even though credit bureaus have traditionally been unfriendly to consumers because their primary responsibility is to protect their clients (businesses and banks) from consumers, recently it’s become easier for you to generate a credit report and correct any mistakes in it.

To see how easy it is now to get your credit report and correct any mistakes, choose one of the three credit bureaus’ websites listed previously. Create an account by answering all the questions asked at the site. There will be a lot of prying questions, so keep your cool and be patient. When you have succeeded, you’ll actually see (and be able to print) your up-to-date credit report! It really is that easy.

If your report has any negative entries, they are listed at the top. Here’s the good part: Next to each entry is a Dispute button. Click the button for the first item to be disputed and fill in a paragraph or two explaining why you don’t think it should be there. Click the Submit button, and then go to the next entry. When you’re finished, you see a message saying that you’ll be notified within 30 days with an updated credit report.

When doing the research for this book, this is exactly what I did, and in 30 days, I was notified. I clicked the Get Report link, and four of the five items I disputed were gone. It’s that easy!

The five negative items on the credit report were all health insurance related: a few lab invoices and a doctor’s office visit. In the dispute response section of the initial report, I provided my health insurance carrier, group number, and an explanation of why the bill should have been already paid. This information was sent to the credit collection company that reported me to the original provider. The company reporting the collections has 30 days to respond when you dispute an entry. If the collection agency doesn’t respond or agrees with your explanation, the item is dropped. If the collection agency disagrees, the credit bureau sends you contact information so that you can try to resolve the collection yourself. In my case, the four lab invoices were dropped. For the remaining item, the doctor’s office visit, all I needed to do was call to work it out.

The credit bureau you use is supposed to notify the other two bureaus to remove the successfully disputed entries, but as they are competitors, this notification doesn’t always happen. It’s your responsibility to follow the same procedure with the two remaining bureaus.

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.

Overview


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information


To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.

Surveys

Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.

Newsletters

If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information


Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.

Security


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.

Children


This site is not directed to children under the age of 13.

Marketing


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information


If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.

Choice/Opt-out


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information


Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents


California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure


Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.

Links


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact


Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice


We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020