How Do Credit Bureaus Affect Your Credit Card Offers?

You may have heard of the "credit reporting bureaus" that manage your credit report and determine your credit score. But who are they? Basically, they're credit reporting agencies (CRAs) that gather data about consumers and have it available to credit card companies, banks, prospective employers and landlords, and others. There are three main CRAs in the USA: Equifax, TransUnion, and Experian.

CRAs are granted access to anyone you have a credit account with (credit card companies, banks, etc.), and they monitor your payment history. They also have access to the court system and other government agencies.

Compiling all this data, they manage your credit report, which reveals everything about you as a credit user: where you live, where you work, whether you pay your bills on time, whether you have a criminal record, and whether you've filed for bankruptcy.

Plugging all this information into a mathematical system, the CRAs come up with your credit score. Many potential lenders use your credit score to decide whether you're a safe credit risk. Some of them don't even look any further: If the number is below a certain mark, they reject you, period. Your credit score is also known as a FICO score, and the range is from about 350 to about 850. If it's above 620, most lenders will deal with you. If it's 720 or better, you're in the driver's seat: Almost any lender will give you their low rates and their best offers.

No one outside the CRAs knows exactly how the credit scores are calculated. But in basic terms, they look at your payment history for the past two years. As an example, TransUnion looks at factors such as?

* How much you owe

* How long you've had your accounts

* The different types of credit you have

* Your balances vs. your credit limits

* How often you apply for new credit, and how recently you've gotten it.

At least once a year, you should get a copy of your credit report from any or all of the three CRAs. Look at it carefully to see if it's accurate. If you find anything untrue, inaccurate, out-dated, or misleading, contact the CRA immediately to have it fixed. This includes basic data like your name, Social Security number, and employer, too. You'd be surprised how often those things are wrong!

If you've had a bankruptcy, it should no longer show up on your credit report after 10 years. For other negative information, the limit is seven years. Credit inquiries can only stay on the credit report for two years. If anything is on the report that's past its due date, point it out to the CRA and have it stricken.

Also, if you have closed certain accounts, make sure they say "closed by customer" not "closed by lender." The latter makes it look like the creditor gave up on you; it's basically the difference between quitting and being fired, and quitting looks much better on your credit score.

If you have some bad credit history, you can fix that with the help of credit repair experts. You have certain rights under the Fair Credit Reporting Act. You're entitled to a free copy of your credit report if you've been denied credit, employment, or insurance and ask for the report within 60 days of the denial. You can also get a free copy if you can prove that you're unemployed and seeking work, if you're on welfare, or if your report has been the subject of fraud.

Fixing mistakes or out-of-date info is free to you as a consumer. You must simply ask the CRA in question for a dispute form.

Some Tips on Bettering your Credit History

*Inform the credit reporting agency what you feel is incorrect. Send them copies of supporting documents. Point out the incorrect data, explain why it's wrong, and request it be fixed or deleted.

*The CRAs are obligated by law to look into any disputes you file within 30 days. Furthermore, they're required to send you anything they turn up that's relevant to the matter at hand. If there's something negative on your credit report that you dispute, and if it can't be verified, it must be deleted from your report.

*CRAs must include complete information, too. For instance, if you had some late payments on one account but subsequently got caught up, your credit report should reflect that. See that it does.

*After an investigation into a disputed item on your credit report, the CRA is required to send you the results in writing. Furthermore, if the dispute leads to a change, they must send you a free copy of your report with the change noted.

*If corrections are made to your credit report, you can request that that CRA send a notice of correction to anyone who asked for your credit report in the previous six months. That way, creditors who turned you down can see that corrections have been made.

*If you have accounts that are missing from your credit report, you should add them. In general, bank credit cards and department store cards will be on there, but some retailers and credit unions don't send information to the CRAs.

Ask the CRA to add this info on future reports. They're not required to, but for a fee they will add them. If you're in good standing with those accounts, it makes sense to include them, so they can reflect positively on you.

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