CREDIT REPORT INFORMATION 101

When it comes to renting in NYC or deciding to purchase real estate, your credit score is important. There are numerous stages in the buying process that will inquire and ask about your credit history. From getting pre-approved to a mortgage, to getting approved by an actual co-op board in your building, your ability to borrow and pay back debts is measured by a credit score. Your buying or renting power will be judges by this score, so it's important to understand how it works! From your early interactions with borrowing, such as opening up your first credit card in a retail store, to leasing your car, below is an overview found from Chase.com. Review and understand what you need to do to be better qualified.

The credit reporting bureaus — TransUnion, Equifax and Experian — are the three major companies that maintain credit reports. The reporting companies issue credit reports to creditors, insurers and others as permitted under law for the purposes of evaluating your financial responsibility.

Here is an example of how the system works:

1. Apply for a Credit Card
   When you apply for a new credit card, the creditor requests a copy of your financial history, or credit report, from one or more of the credit reporting companies.

2. The Creditor's Assessment
   The creditor may use your credit report, a score, and other information you provide (such as income or debt information) to determine whether to approve your application and what rates to offer.

3. The Creditor's Decision
   If you are issued a card, the creditor reports that account to the credit reporting companies, and then updates it, including your balance and payment activity, about every 30 days.

4. Your Credit Profile Updated
   The credit reporting companies update your credit report as they receive new information from creditors and lenders. Your credit profile changes based on your financial activity. The next time you apply for a credit card or loan, the process repeats.

YOUR CREDIT REPORT

Your report is divided into six main sections. When you open a new account, miss a payment or move, these sections are updated with new information. These sections are:

1. Identifying Information
   (name, address, birth date and Social Security number)

2. Employment

3. Consumer Statement

4. Account Information

5. Public Records

6. Inquiries

MANAGING YOUR CREDIT REPORT

NEGATIVE RECORDS

Late payments create a negative record. Generally, negative records will stay on your report for up to 7 years (up to 10 years for certain bankruptcy information). Positive records can remain on your credit report longer.

YOUR CREDIT REPORT IS UPDATED IN MOST CASES EVERY 30 DAYS

Your credit report is updated with new information reported by your creditors. Most creditors report new information approximately every 30 days, to reflect your account balances and payments you make.

CHECK EVERY 6-12 MONTHS

Not all creditors report to all three companies; the companies obtain their data independently, so your credit reports from TransUnion, Equifax and Experian could substantially differ. That's why it's important to check your three credit reports every 6-12 months to ensure that the information is accurate and up-to-date.

CORRECTING INACCURACIES

Under the Fair Credit Reporting Act, consumers are protected if there is inaccurate information on their credit reports. If you find inaccurate information on your credit reports, you can contact the associated creditor or lender directly. You can also dispute the inaccuracy with the credit reporting companies.

KNOW THE SYSTEM

Managing your credit and maintaining a good credit history can lead to better rates on major purchases. We recommend that you check your credit reports every 6-12 months, or at least 3 months before a major purchase, in order to identify potential inaccuracies and any signs of identity theft.

Routine check-ups, along with paying your bills on time, keeping your credit card balances below 30% of their limits, and correcting any inaccuracies will help ensure your credit reports are viewed in the most favorable light.

This information is for educational purposes only and does not constitute legal or financial advice. You should always seek the advice of a legal or financial professional before making any legal or financial decisions.