Credit Report Data Getting More Personal
Credit reporting is a booming business. Agencies now sell data about how much you make, how much you owe, even predicting if you will take your medication. Taking care of what your credit report says about you should be a financial resolution for 2012.
Credit agencies are finding new ways to collect and assemble data on individual consumers. Credit reports can now reveal evictions, applications for payday loans, even if you are behind on homeowner’s association dues. Agencies analyze and sell this data to lenders, employers, insurers and renters who use these reports to make judgments about you.
Credit agency CoreLogic will soon provide credit files that dig deeper than the three traditional credit bureaus–Experian, TransUnion, and Equifax. According to the New York Times, this will include property tax liens, if more is owed on a house that it is worth, or if someone is behind on homeowner’s association dues. It may also include payment history for utility and cell phone bills. This data will be available in March for mortgage and home equity lenders, but it could eventually be developed for other types of credit. CoreLogic combines property and mortgage information; legal, parcel and geospatial data; motor vehicle records; criminal background records; national coverage eviction information; payday lending records; credit information; and tax records.
In February 2011, Experian purchased RentBureau, a credit bureau that allows apartment owners and managers to share rental payment history. These rental payment histories are now factored into Experian’s consumer credit reports.
“As agencies add more information to credit reports, there is a greater chance for negative entries and black marks to show up on on your credit report,” says Bill Hardekopf, CEO of LowCards.com. “Extended reporting could be bad news for households that are already living on the edge and struggling to pay the bills each month. A missed payment here and a late payment there can add up. Unfortunately, there is no loan officer to look at the whole story. Financial histories and futures could now be judged by algorithms.”
Having a good credit report means access to loans with lower interest rates; lower interest rates translate into smaller monthly payments and keeping more money in your pocket. A good credit report can also help you qualify for a job, insurance or an apartment. A bad credit report can lead to higher interest rates, housing rejections and a more difficult job search.
Here are some tips for building a better credit report:
* Review your credit report and make sure all of the debts are accurate. Each year you can get a free credit report from the three credit bureaus (Experian, TransUnion, Equifax) through www.AnnualCreditReport.com
* Know your rights. Under the Fair Credit Report Act, both the credit reporting company and the information provider are responsible for correcting inaccurate or incomplete information in your report. Tell the credit reporting company, in writing, what information you think is inaccurate. Include copies (you keep originals) of documents that support your position. Credit reporting companies must investigate the items in question unless they consider your dispute frivolous. When the investigation is complete, the credit reporting company must give you the written results and a free copy of your report if the dispute results in a change. If the negative information in your report is accurate, you must wait out the time for its removal. A credit reporting company can report most negative information for seven years and bankruptcy information for 10 years.
* Pay all your bills on time. Late payments, the most common piece of negative information appearing on credit reports, are often responsible for significant drops in credit scores. Make at least the minimum payments on your credit cards and loans on time each and every month. If you have a good payment history but slip up with a random late payment, ask your lender to erase the late payment from your credit history.
* If you have a good credit card, keep it. Maintaining a card and building a good payment history looks good on your credit report and helps build your credit score. Creditors want you to have a long, dependable credit history.
* If you are just getting started, don’t open several new accounts all at once because that will lower your average account age. Opening too many accounts during a short period could indicate you are desperate for money and are a credit risk.
* Pay off your debt. High balances and high debt ratios can drag down your credit score. If you are having trouble paying your bills, contact your creditors to work out a payment plan or see a legitimate credit counselor. This will help you manage your credit and improve your score over time. A good place to start is the National Foundation for Credit Counseling.
* Get a checking and a savings account.