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Credit Rating Agencies

Credit rating agencies make a profit by collecting information on people's credit history and selling it as credit reports to businesses, employers, and landlords. Credit reports are used by businesses to predict how a person will pay their bills in the future and to measure the risk in lending money to an individual. Under the Fair Credit Reporting Act, a credit report cannot be sold to an employer without your written consent.

Credit reports contain records of:
• Loans, payments, and credit limits during the past 7 years
• Bankruptcy, judgments, liens, and overdue taxes
• Overdue child support payments
• Names of creditors that have recently asked for a report.

Companies do not expect a perfect payment history but view unpaid debts negatively. The better your credit history, the higher your credit rating, and the more easily you can access credit.

High credit ratings indicate:
• Timely repayment of debt, including monthly bills, credit cards, and loans
• Payment of taxes in full
• Not dependent upon credit, i.e., not at the maximum of credit card limits
• No outstanding bad checks

It is important to know what is in your credit report because it can contain errors that can lead to your being denied credit. If you want to correct errors on your credit report, take the following steps.

Step 1 - Get a copy of your credit report

Credit agencies don't collect the same information; so get reports from all three national credit agencies to catch errors and safeguard against fraud..

You are entitled to a free report if:
• you have been denied credit, employment, or insurance on the basis of a credit report
• you are unemployed and looking for a job
• you are on welfare
• inactive credit accounts are closed

Step 2 - Review Your Report

Check that information in the credit report is current and accurate.
• Review the credit limit, recent balance and payment information for each account.
• If you have separated or divorced, check that all accounts are now listed as “individual” and not “joint with.”
• Confirm that accounts you closed are reported as “Account closed at consumer's request.”
• If you have changed your name, make sure that your previous credit history has transferred over.

Step 3 - Correct Errors

Call or write to the credit agency and include as much information as possible about each error. The agency should respond to you within 30 days. If it is determined that the agency records are correct, then the debt item will remain, although you can have a statement of explanation included on the report.
Tip: Stay away from agencies that promise to change or erase negative information from your credit report for a fee. Only time or repayment of debts can remove true information. At best, those agencies can do what you can do for free; at worst, they will take your money with no change to your credit rating.

Step 4 - Verify

Request your credit report again in 30 to 60 days to be sure that errors were corrected, deleted, or that your statement of explanation was included.

Further resources:

Equifax
www.equifax.com/home/en_us

Experian
www.experian.com/

Trans Union Corporation
www.transunion.com/

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