Consumer Reports

What is a Credit Report?

What is a Credit Report?

A credit report is not the same thing that you get when you ask for your "credit report" directly from the credit reporting agencies, Equifax, Experian and TransUnion or through AnnualCreditReport.com. That document that you get when you go directly to a consumer reporting agency is a document known in the credit reporting industry as a consumer disclosure. The purpose of a consumer disclosure is to comply with the federal law which requires the credit reporting agencies to disclose the contents of your credit file to you when you ask for it. Nor is a credit report something that currently exists at this very moment. Unless it just so happens that right now you are applying for credit, you don't have a credit report. A credit report is something that is created at the moment it is asked for. 

At its most basic level, a credit report is simply a report that is...

Out-of-Date Entries on Your Credit Report

Negative information such as: delinquencies, bankruptcies, charge-offs, loan defaults, foreclosures, lawsuits and judgments, and tax liens are barred from forever appearing on your credit report. The Fair Credit Reporting Act (FCRA) requires credit reporting agencies to remove most negative information from your credit reporting after the credit reporting time limit has expired. Reporting old, out-of-date information is against federal law.

According to the FCRA, credit reporting agencies cannot report negative information for an undetermined amount of time. In fact, negative information can only be reported for a specific amount of time.

Credit Reports and Employment Background Screening

One of the Federal Trade Commission’s (“FTC”) roles is to protect job applicants and employees against inaccurate information being reported to employers; because employers can access your credit report to make decisions regarding hiring, firing, promotion, reassignment, or retention. In addition to financial history, the consumer reports provided to employers consist of arrests, convictions, judgments, and bankruptcies. Recently, settlements have been reached in legal actions that have been brought against companies like Spoekeo, Inc. and HireRight Solutions, Inc. for failure to take reasonable measures to ensure the accuracy of consumer reports. Such failures resulted in inaccurate criminal history, belonging to someone other than the actual consumer being reported as if it was relating to the individual the report was requested for. Other failures included noncompliance with the FCRA rules and not ensuring the reports were used for only purposes provided by the law.

CFPB Releases Results of Study of Differences Between Consumer and Creditor Purchased Credit Scores

What should you do if you learn that your credit report has errors? You can either contact us about how to proceed or send a dispute to the consumer reporting agency (CRA) on your own. There are several ways to initiate the dispute process with the CRAs, including using the dispute form which you may have received when you ordered your credit report; using the CRAs online dispute form; sending a dispute letter by mail (certified mail is recommended but not required); or by telephone. Whichever method you choose, you should remember to keep an accurate record of your dispute, including a copy of your dispute form or letter. If you use the online dispute form, you should take a screen shot of your dispute before sending it. 

Consumer Reporting Agencies Subject to Increased Federal Supervision

Earlier this week, the Director of the Consumer Financial Protection Bureau (“CFPB”), Richard Cordray, spoke at a field hearing were he discussed the CFPB’s new authority to supervise consumer reporting agencies. Starting this September, the CFPB will have the authority to supervise 94% of the credit reporting industry. Until now, consumer reporting agencies (commonly referred to as “credit reporting agencies” or “credit bureaus”), the largest of which are Equifax (including credit files owned by CSC Credit Services), Experian, and Trans Union, have never been subject to like supervision. From conducting on-site examinations to seeking better comprehension of policies and procedures, the CFPB’s supervisory authority will seek to ensure that the consumer financial laws are being followed.

The creation of the consumer bureau, the CFPB, was done so in response to the recent financial crisis experienced by the United States.