Credit Reporting Agencies and the Law

Whenever you apply for a loan for any purpose such as buying a car, or going for a vacation, the lenders check your credit report for determining your ability to repay your debts. Your paid or free credit report contains information about your borrowing, spending and repayment habits over the past few years. This helps the lenders to assess the repayment capacity as well as credibility based on past practices. This assessment done by lenders based on the credit report determines the interest rates that will be charged and the amount of credit that will be extended to you. However, if you do not have any previous credit history, which is possible in case you have just started out in life, there is no data to base the assessment on.

Legally, whom should I contact to get my credit report? – The most basic question

Credit reports are prepared by credit report agencies. The main three credit report agencies that have offices nationwide are Equifax, Experian, and Trans Union. These credit report agencies collect as well as store credit information of approximately 200 million consumers. More than ninety percent of the information collected is retrieved from credit grantors such as banks, credit unions and other financial institutions. These financial institutions send the credit report to the credit report agencies on a monthly basis. Additionally, these agencies collect and maintain information from public records as well as from other smaller credit report agencies. You can get your credit report from any of the three agencies.

As per the law, who else is eligible to get my credit report?

Your creditors, insurance company, homeowner, and others who want to check your credit worthiness can request for your credit report. The credit scores listed with the credit report agencies influence almost all areas of finance, which include loans and mortgages, the interest rates on these loans, employment opportunities, and insurance premiums. Credit report agencies calculate your credit score on the basis of your outstanding debts, period of debt, types of credit used and kinds of accounts that are operated. There are many more factors that are also included but these are the most important ones.

How to get my credit report that is legally available free of cost?

If you do not have a clear credit report, it will not be easy for you to successfully apply for any kind of credit. Even if you get an approval for receiving credit, the lenders will usually charge very high interest rates due to your high-risk status. Therefore, it is necessary to keep an eye on your credit report regularly. It is possible to request for a credit report from any or all of the credit report agencies. Earlier, there used to be a charge on requesting a credit report. However, according to new guidelines, you can now request a free report online through annualcreditreport.com.

Many people do not have any clear idea of the functions of credit report agencies. Credit reporting agencies exercise no bias against anyone nor do they share the private information of consumers with other people or agencies. However, creditors and insurance companies can access your credit report to determine your credit risk.