Credit Reporting

All your campus-based student loans and other accounts are reported to the three national credit bureaus: Equifax, Experian (formerly TRW) and TransUnion. If you have student loans from other lenders, they are also probably reported to at least one of these credit bureaus. Once your student loans go into repayment, you will be building either a positive or a negative credit history.

Consumer Credit Report

A consumer credit report is a factual record of an individual’s credit payment history. It is provided for a purpose permitted by law: to help a lender quickly and objectively decide whether to grant you credit. Most of the information in your consumer credit report comes directly from the companies you do business with, but some information comes from public records.

Types of information:

  • Identifying information: your name, nicknames, current and previous addresses, Social Security number, year of birth and current and previous employers.
  • Credit information: specific information about each account such as the date opened, credit limit or loan amount, balance, monthly payment and payment pattern during the past several years.
  • Public record information: federal district bankruptcy records, state and county court records, tax liens and monetary judgments.
  • Inquiries: the names of those who obtained a copy of your credit report for any reason, during the past two years.

How Long Information Stays on a Credit Report

Federal law specifies how long negative information may remain on your credit report. Most negative information must be erased after seven years. This includes late payments, accounts that the credit grantor turned over to a collection agency and judgments filed against you in court--even if you later paid the account in full.

The length of time a bankruptcy remains on your credit report depends upon which chapter of bankruptcy you file. Chapters 7, 11 and 12 remain for 10 years. A Chapter 13 bankruptcy, in which you repay part or all of your debts under a court-approved payment plan, remains on your credit report for seven years. Credit reporting agencies use the date of original delinquency or, in the case of public records, the date of filing to determine when negative information is deleted.

Positive information remains on your report indefinitely.

How Consumer Credit Reports Are Used

Federal law specifies who may obtain a copy of your credit report and how it may be used. You may request a copy at any time, but no one else may legally review your report unless they do so in connection with one of the following:

  • Your application for a government license
  • A credit transaction or other legitimate business need
  • Employment purposes such as hiring or promoting
  • Underwriting insurance
  • A court order or federal grand jury subpoena
  • Your written instructions

Benefits of Consumer Credit Reporting

Before the advent of national credit reporting agencies, consumers could obtain credit only in communities in which they were known and had lived for years. Now, automated credit reporting systems enable a consumer’s good credit reputation to make credit possible no matter where that consumer decides to live.

Because of automated credit reporting agencies, Americans enjoy the widest access to credit at the lowest interest rates in the world. Credit information enables lenders to either avoid consumers who don’t pay their bills or to lend to them on special terms. Credit losses, which ultimately get passed on to consumers who do pay their bills, are therefore minimized.

Your Credit Rights

Equal Credit Opportunity Act

This act was enacted to make sure women receive the same treatment from creditors as men. You have the right to obtain a credit card in your own name if you are a married woman and to have child support and alimony counted as income at your request. Creditors may not ask you about birth control or child-bearing plans. They are required to tell you their reasons if they deny you credit.

Fair Credit Billing Act

  1. You have the right to file a written complaint within 60 days after the bill you question was mailed to you.
  2. The creditor must acknowledge receipt of your complaint within 30 days and reach a settlement with you within 90 days.
  3. Until the matter is resolved, the creditor may not collect the disputed amount from you, nor may the creditor report any negative information about the dispute to credit reporting agencies.

Fair Credit Reporting Act

Offers legal protection of consumer privacy by:

  1. Limiting the purposes for which a consumer report may be used.
  2. Giving the consumer the right to receive full disclosure of everything in the file.
  3. Limiting the length of time which adverse information may be reported.
  4. Informing the consumer when a report has contributed to a denial of credit.
  5. Providing the consumer with an opportunity to dispute information.
  6. Limiting the access of governmental agencies.
  7. Providing civil and criminal liability for violations of the law.

Checking Your Credit

You may obtain a free credit report if you have been denied credit within the past 60 days, or you are unemployed and intend to apply for employment within 60 days, or you are a recipient of public welfare assistance, or you have reason to believe the file contains inaccurate information due to fraud. You can call, write, or go to the website to obtain a credit report.

EQUIFAX 1-800-997-2493
Cost is $0 - $8.00, depending on State of Residence.
EXPERIAN 1-888-397-3742
TRANSUNION 1-800-888-4213
Cost is $0 - $8.00, depending on State of Residence.
If you are a resident of Colorado, Georgia, Massachusetts, Maryland, New Jersey, or Vermont, your credit report is free.

When Your Credit Has Been Denied

  1. Obtain a free copy of your credit report to see what negative information is being reported.
  2. Request an explanation of the denial of credit from the company that denied you credit.
  3. If you spot an error, contact that reporting agencies and discuss the error with them. If there is an error, that agency should make the correction. If the agency says it was not a reporting error and you disagree with that decision, you should file a consumer dispute.
  4. To file a consumer dispute, contact your local credit bureau. They will send you a form to complete. Based on that information, they will send an official Consumer Dispute Verification form to the reporting agency. That agency must respond within 5 days or the negative information will be deleted. Your local credit bureau will forward the change in your credit reporting to the other credit bureaus.
  5. If the reporting agency is reporting correctly, but you feel there were mitigating circumstances, you may have an explanation put on your credit report. Call your local credit bureau to submit an explanation.

"Credit Repair"

"Credit Repair" is a term used by operators who charge a fee for a service they cannot perform. You cannot repair a bad credit record, you rebuild a good credit record.

  1. Pull a copy of your credit report and work on the negative items. Remember that negative reporting can only remain on your record for seven years. Time will eventually take care of some of the negative information. File disputes on obvious errors, or even on simply questionable ones. Contact your local credit bureau to file a dispute.
  2. Do not go to a “Credit Repair Clinic”. They are expensive and they cannot do anything you can’t do for yourself.
  3. Most creditors pay attention to your recent two-year history. Therefore, build good credit, to improve your ratio of positive to negative credit.
  4. Create a budget you can live with and open a passbook savings account. Set up direct deposit from your paycheck. After $500 is saved, apply for a loan secured by your savings and pay it back by making timely, monthly payments. Be sure your bank is reporting this loan to the credit bureau. You could also get a credit card from your bank, with the credit limit being the amount in your savings. Use it for purchases and PAY IT IN FULL EACH MONTH. Try to get a card with no annual fee. Be sure you get a card that gives you a 24-day grace period to pay in full before accruing interest.
  5. Get a credit card from a department store or an oil company. They are usually more liberal in granting credit. Make modest purchases and pay in full each month. These cards usually do not charge annual fees or interest if you pay in full each month.