How Credit Reports Work For You – Money Pacers
How Credit Reports Work For You

How Credit Reports Work For You

Credit Repair (MP) Understanding credit reports will place you far ahead of most people attempting DIY credit repair. In part II of my series DIY Credit Repair, I’ll be discussing the three credit bureaus and how to read their compiled data.

There are three credit bureaus that are nationally recognized Equifax, Experian, and the TransUnion company. They are used by professionals and reputable lenders alike as guides to granting credit. Their primary function serves to supply a history of your payment habits, including loans from banks, credit unions, loan companies and retail stores. Also found will be information regarding landlord leases, rent payments, mortgage loans, and Internal Revenue Service (IRS) outstanding. The bureaus store this information in huge databases and sell them to prospective lenders. A lender or Credit Card Company may contact one of the three credit bureaus and reviews your credit report. If the company approves your application for a credit card or loan, then the information you’ve supplied is forwarded to the credit bureau and place inside your credit report.

What are Credit Reports

Simply put, your credit report tells a prospective lender who you owe, how much you owe, and how diligently you have already been paying them. And you should know the three credit bureaus are thorough. For instance, inside their files, many specific details of you can be revealed. Late payments, returned checks, judgments, liens, and repossessions are only a handful. Some examples of date found may appear on your credit report are as follows:

  • Bank Credit Cards (Visa, MasterCard, American Express, etc.)
  • Retail Credit Cards (Home Depot, J.C. Penny, Target, etc.)
  • Home and Mortgage Loans
  • Car Loans
  • Student Loans
  • More Loans

In the event you have previously defaulted on any payments your report may include information such as:

  • Utility Bills (gas, power, water, telephone)
  • Medical Bills
  • Rent Payments
  • Property Taxes
  • Attorney Bills

So, if you have two bills to pay, and you cannot pay both, pay the bill that’s reported on your credit reports. This either serves to repair credit or keeps it from being damaged, and you should contact lender or company and make arrangements to make partial payments or late payments that will keep you in good standing in the future.

Other Information

In an effort to sell consumer data the three credit bureaus have compiled other information services far beyond reporting. Some of this includes:

You’re Pre-approved: These days it’s not uncommon to receive mail informing you that you’ve been pre-approved for a certain amount of credit. Well, how do they reached this conclusion? The truth is simple: Lenders will prepare a list of criteria for granting credit and send this list to the bureaus. For a fee, the bureaus present a list of people who match the lender’s parameters. Consequently, you receive mail tempting you with these so-called good deals.

Consumer Ratings: In the financial services industry, there exists a phrase linked to practically every piece of paper they generate. You might have heard about it: ‘Past performance does not guarantee future results.’ The thing is credit bureaus don’t always follow this rule. The truth is they practice the opposite — it’s labeled as consumer rating. In other words, the bureaus will check your credit history and access your future performance value to the leader. Simply put Consumer rating categories you into sectors that lenders can easily find: from least desirable, to most desirable.


Every time you apply for a credit card to get free movie tickets; that trip to Las Vegas or even a T-shirt, you are adding another hard inquiry to your credit report. When potential lenders see these inquiries, they may assume that you’re either in some financial situation where you need a lot of credit or are planning to take on a large debt. Either can flag you – a high credit risk.  Other types of inquiries, such as your own requests to view the report, employer requests to view the report and requests by marketers to get your name in order to sell you something, count as soft inquiries. Although these inquiries don’t show up on the reports that lenders see, and therefore don’t affect how they view your credit, they can serve to lower your credit score.

Target Consumption

Because The three credit bureaus know exactly whom you owe, as well as how much you’ve been spending and with what company, it’s easy for them to draw conclusions about you. Example, you just charged a few thousand dollars at Home Depot, a credit bureau will add you to a list of people they consider “in all likelihood to buy new fencing.” Don’t be surprised, remember, credit bureaus compile and sell targeted lists containing your spending habits, and income ranges to lenders and retailers for a living.

Collection Agencies

Many companies use third-party collection agencies to track down and collect unpaid debts. Also, many of the collection agencies on their own will use information brought from the three credit bureaus to carry out collecting old debts.

Public Information

The Agencies also access information about you from public record information such as court records.

Access to Credit Reports
The Fair Credit Reporting Act (FCRA) specifies who can access your report and for what reasons. Your credit report can be viewed by people you have initiated business with, such as lenders, landlords, credit card companies and other businesses. Each of these groups must have a “permissible reason” to view your report, and their inquiries count as hard inquiries.

Report Errors

While compiling large volumes of information about so many people, it is not uncommon for the three credit bureaus to enter incorrect information about you. Because errors occasionally find their way into your credit report, it a good idea to review your report once a year. After obtaining a copy of your credit report write to any (or all) credit bureaus requesting a correction. First, use form 770, “Request for Credit Report,” in the forms section of the website. In some states, the FCRA law requires that credit bureaus give you a free copy of your credit report at least once a year. But, if your state doesn’t have this law the cost of ordering a credit report is around $9.95.

Under the FCRA, both the credit reporting company and the information provider (that is, the person, company, or organization that gives information regarding you to a credit reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the credit reporting company and the information provider.

After you discover errors in your credit reports there are things you can do….

1. Tell the credit reporting company, in writing, what information you view is inaccurate.

2. Tell the information provider (that is, the person, company, or organization that provides information about you to a credit reporting company), in writing, that you dispute a particular item in your credit report.

Three Credit Bureaus Phone Numbers

* Equifax: 800-685-1111
* Experian: 888-397-3742
* Trans Union: 800-916-8800

You can also check your credit scores by using free tools at sites like, a free credit and financial management platform for US consumers available on the web and major mobile platforms. The website helps you access your credit score from two of the three major credit bureaus and provides you with tips on how to improve your credit score. Checking your own credit reports and scores never hurts your credit score in any way.

Don Briscoe
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Don Briscoe

Finance educator, advisor, and leading voice in the global financial literacy movement.Founder and editor of lives and enjoys life with his family in New York.
Don Briscoe
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