Anytime you request a new credit account, take out a loan or make a payment on your credit card, a credit bureau records that information. The credit bureau then uses that information to compile a credit report that creditors use to determine your eligibility for new credit cards, higher credit limits and interest rates on everything from car loans to retail store cards. The three major credit bureaus, Equifax, Experian and TransUnion, all follow a list of regulations set forth by the Fair Credit Reporting Act.
Information Reported on a Credit Report
The Fair Credit Reporting Act establishes what information a credit bureau can include on a consumer credit report and how long that information can remain on the report. Civil suits, judgments and arrest records may not appear after the governing statue of limitations has expired. Paid tax liens, accounts sent to collections or any other adverse action against the consumer cannot appear for more then seven years. Bankruptcies may not appear after ten years. A credit transaction or life insurance policy greater then $150,000, and an employment record with an annual salary of $75,000 or higher can remain on a credit report indefinitely.
Information Disclosed with a Credit Report
Credit card bureaus are required to include certain information with every consumer credit report. If a consumer initially files for bankruptcy but withdraws the claim before the final judgment, the bureau must report this information. If a consumer willingly closes a credit account, the bureau must list the account as closed by the consumer. If the consumer disputes information on their credit report, the credit bureau must include a record of the dispute in every report they deliver. In addition, if consumer's credit score is low due to a number of inquires on their credit report, the credit bureau must indicate that as the reason for the low score.
Access to Credit Reports
The credit bureaus may provide a credit report to any parties looking to offer credit to a consumer, including credit cards, mortgages and personal loans. The bureau may also provide a report to an insurance underwriter or for employment purposes. However, the consumer must agree to a credit check in writing before the prospective employer can request the report. State governments can also request a consumer credit report to evaluate child support payments.
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