Understanding Your Credit Report | Page 2

Finding an error or negative information in your report is not the end of the world.  There are actions you can take to correct the situation.  You have a right to dispute the accuracy or implications in your report.  When you submit a dispute directly to the credit bureau, the credit bureau is obligated to investigate the item in question and provide a resolution within a reasonable period of time, generally thirty days.  Of course the disputed information must be verifiable.  For example, the credit bureau may not delete a record of late payments if you fail to show that your payments were timely made.  However, you can provide a written explanation of the cause and that statement should be included in all future inquiries.  At your request, the credit bureau will send an amended report to any recipient (other than an employer) within the last six months.  Any record that cannot be verified should be deleted, wrong information should be corrected, incomplete records should be completed, and accounts that were once past due but now current should state so.

As a consumer, your right to review and dispute credit report findings is protected by the Fair Credit Reporting Act (FCRA).  This act also details who can access your report and how you are informed of requests made.  Some of the rights granted under the FCRA include:

• you must be told if information in your report has been used against you
• you have the right to know what is in your file
• you have the right to dispute an incomplete or inaccurate information
• consumer reporting agencies must correct or delete inaccurate, incomplete or unverifiable information
• you must give your consent for reports to be provided to employers

For more information, including information about additional rights, go to www.ftc.gov/credit .

The second component of your credit report is your credit score.  A statistical program analyzes your payment history, the number, type, and age of the accounts and loans you have, late payments, collections, and outstanding debt.  Your information is compared to others and the probability that you will repay the loan is determined.  The analysis results in your credit score.  Scores are solely based on the data included in your credit report; therefore, your income, savings, and amount of down payment are not factors in computing your score.

FICO^® is the most popular of these scores and is an acronym for and developed by Fair, Isaac & Company, Inc.  Typically, FICO^® scores are considered objective, consistent, accurate, and fast; however, their exact formula is an unknown industry secret.  Any factor considered discriminatory is not included.