Thanks to a new federal law put into place in September of 2005, everyone is entitled to one free credit report each year. This is so that you can verify that your report does not contain any false information, and so you can see how your credit rates. Getting your annual free report is as easy as going to the authorized source, www.annualcreditreport.com and requesting one.
Once you have your free report, what in the world do all those abbreviations, numbers and codes mean?! The most widely used system for scoring is the FICO score, developed by The Fair Isaac Corporation, and the number determines the risk to extend credit to an individual. Credit reports are usually divided into sections; identifying information, public records, credit history, and inquiries to your credit report from creditors looking to extend you credit based on your credit score.
The identifying information includes your name, address, and social security number. Make sure they are all correct. Usually this section will also include a list of your previous addresses, your date of birth, phone number, spouse’s name, employers information.
The public records section is the section you hope has no information. This is where a bankruptcy or judgment would show up on your report, and it will harm your rating more than anything else on the report, and take longer to repair.
The credit history section is the most confusing. It will list every creditor you’ve ever had business with, including accounts that have been closed and those that remain open with no balances, and accounts that you are currently making payments on. Depending on which credit reporting agency you get your report from, this section will actually be displayed differently on each report. Experian’s report displays it in “english”, and states everything in common sense terms, like “pays on time”, “pays 30 days late”, etc. Reports from other agencies might use numerical codes in a table that you have to refer to another page to find out what each code means. Either way, make sure you agree with each creditors reporting of you since this is how your score is determined. If you have accounts that you don’t have the credit cards for anymore, or a loan that has been paid off but remains on your report as a revolving credit (money available to you as you pay it down), call and write each company to ask them to close the account completely and report that to the credit agencies. Otherwise, it appears that you have all of that money available to you, and that goes against your debt to income ratio.
The section called “inquiries”, and it includes a list of everyone who has ever looked at your report. This will include credit companies you’ve contacted to request a credit card or loan, but it will also include what is considered “soft” inquiries. Soft inquiries are any promotional offers, such as a retail store checking into your credit history to determine whether or not to mail you an offer for their credit card. Soft inquiries do not harm your overall credit score.
You can also get a copy of a credit report any time you’ve been denied credit. This is because there is always the possibility that there are errors in your report, which prevented you from obtaining the credit you applied for. Regardless of how you get your report, take the time to look it over and find any discrepancies (immediately call the creditors in question and straighten it out) and close out any accounts that you no longer use but are showing open and available to you on your credit report. Having your report will show you where you stand if you’re considering going for a mortgage, new vehicle, or other loan.
Copied with permission from: http://plrplr.com/20033/what-s-in-a-credit-report/
A subject of great concern to many of those with damaged credit is the issue of time limits. The two main categories are collection-related and reporting-related.
Collection Of Debts
Collections Action - A creditor or third-party collection agency can legally demand or request payment on a debt, via letters and phone calls, forever, as long as the debt remains unpaid. A debtor can order a third-party collector to cease communication, as per the Fair Debt Collection Practices Act, which should stop routine demands from that source. (See our Collection Agency FAQ for details.) In practice, the older a debt is, the less vigorous the collection efforts will be, and the more likely the creditor or collector will give up easily. And, unless the debt is secured by some type of property (e.g. a car), they cannot actually force a debtor to pay without a lawsuit.
Lawsuits - When a consumer is seriously delinquent (late) on a debt for a significant amount, there is the possibility of the creditor filing a lawsuit. The time limit for doing so is known as the statute of limitations, which is set by individual states. The relevant statute is the one for the state in which the debtor resided at the time of the delinquency. The expiration of the statute of limitations covering a debt will not necessarily prevent a lawsuit, but it will provide an absolute defense, whereby the debtor is simply required to file a response with the court, pointing out this fact, in order to have the suit dismissed. Here is a chart with the statute of limitations for each state and type of debt.
Judgements - If a lawsuit has already been filed and won by a creditor, there is another, separate statute of limitations for enforcing (collecting) the judgement. Here is a chart with the judgement enforcement time limits for each state.
Federal Taxes - Ten years from the date of the assessment for delinquent amounts, unless a lien has been filed. Tax liens on, for example, real estate, remain until the back taxes have been paid.
Student Loans - There is no statute of limitations or other time limit for lawsuits or other enforcement action on defaulted federal student loans.
Credit ReportingThe time limits for various types of information to appear on consumer credit reports are set by the federal Fair Credit Reporting Act.
Making payments or partial payments on bad debts does not effect the running of the credit reporting time limits, except in the case of tax liens and federal student loans. All other types of items should expire on schedule, based on the original dates, regardless of when or whether they are paid. There was previously a great deal of confusion over the starting point, which could have been interpreted as the date of the last activity on the account. This resulted in the possibility of "re-setting the clock" on an old bad debt by making a payment on it, or by paper-shuffling on the part of collection agencies. The issue was clarified in the 1996 amendments to the FCRA, which set a specific starting date related to the original delinquency date (see FCRA Section 605 (c) (1).)
Inquiries - Two years.
Late Payments - Seven years from the month in which the late payment was due. If there are multiple late payments in one account item, then they will each expire individually.
Charge-Offs - Seven years. The time runs from the date of the delinquency, plus 180 days. If a payment was due on an account on January 1, 2000, but the debtor defaulted, and never caught up to become current again, and the account is eventually declared a charge-off by the creditor, then the seven year reporting time limit starts running on July 1, 2000, with the item scheduled to expire from his/her credit reports on July 1, 2007. Here is our article on charge-offs.
Collection Accounts - Seven years. The running of this time limit is the same as with charge-offs. The date of delinquency still refers to the original delinquency with the original creditor, regardless of when the collection agency began working the debt. This includes debts that have been bought by a collection agency. Collection agencies cannot legitimately "re-set the clock."
Lawsuits And Judgements - Seven years or until the governing statute of limitations has expired, whichever is longer.
Bankruptcy (Chapter 7) - Ten years (from the date of entry of the order for relief or the date of adjudication.
Bankruptcy (Chapter 13) - Seven years.
Paid Tax Liens - Seven years from the date of payment.
Unpaid Tax Liens - Forever (unless paid - see above.)
Unpaid Federal Student Loans - Forever (unless paid, after which they can appear for seven years.)
The above time limits apply to credit reports which would be available to creditors for most types of credit applications. However, the credit bureaus are legally permitted to disclose older information in the following situations:
A credit application involving a principle loan amount of $150,000 or more.
An application for a life insurance policy with a payout of $150,000 or more.
An application for employment in a position paying $75,000 per year or more.