Banks, mortgage lenders, stores, automobile dealers, utilities, apartment complexes, and other credit granting companies (as well as employers) contract for information from the major credit bureaus to determine if any given individual is a good credit risk. They also cooperate by sending both good and bad credit information to the same bureaus. These bureaus commonly calculate consumer credit “scores” that function as convenient means of summing up the factors that relate to credit risk. These involve more than just paying bills on time. Length of employment, stability of residence, and many other factors come into play.
In the United States, the Fair Credit Reporting Act (FRCA) regulates credit bureaus, officially termed “consumer reporting agencies.” The three largest agencies are Experian, TransUnion and Equifax, although many smaller companies collect and sell information relating to consumer credit.
A number of companies advertise on television and the Internet that they can investigate your credit reports and scores, often “for free,” in an attempt to enroll you in costly ongoing credit monitoring services. The major credit bureaus each have procedures that allow you to view your credit report once a year at no cost. You have an automatic right to see the report or reports in any instance in which a credit grantor rejects your application.
Sometimes the information held by the credit bureaus is simply wrong. In such a case, federal and state laws give consumers many means to challenge the information, get it corrected, and otherwise protect their rights as credit consumers. Services and companies that purport to “repair” credit do so for a fee, often duplicating the same efforts consumers can do on their own. The credit bureaus themselves will assist you, as will your local governmental consumer affairs office.
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