What is a Credit Report ?
A credit report is a detailed summary of someone’s credit history and is created by credit bureaus. A credit bureau gathers information and prepares credit reports from the information. Lenders analyze and use these reports, together with other important details, to see if a loan applicant is worthy of credit. The United States has three main credit reporting bureaus: Experian, Transunion, and Equifax. Each one of these bureaus collects an individual’s bill-paying habits and other personal details to come up with a unique credit report and score.
Mostly, the information is similar except for a few small differences among the reports. Credit reports contain personal information including previous and current addresses, employment history, and social security numbers. They also contain credit history summary like the types and number of accounts that are in good standing or past due and detailed account information concerning credit limits, high balances, and date of account opening. The reports outline credit enquiries and information about accounts submitted to credit agencies. In general, credit reports hold negative reports for 7 years and bankruptcy filings stay on a credit report for around 10 years. If someone applies for credit, rental property, or an insurance policy, insurers, creditors, landlords, and a few others are allowed by the law to access their credit report.
An employer may also request to have a copy of the report if the person agrees and gives their permission in writing. These parties pay the credit bureaus to attain the report. The credit reporting bureaus are required by the Fair Credit Reporting Act to give customers a free credit report once every year. Consumers can also receive a free credit report when any company takes an unfavorable action against them. The action may include denial of employment, credit, or insurance. Consumers, however, must request for the report within 60 days of the action being taken. Moreover, consumers on welfare, victims of identity theft, and an unemployed person who plans to seek a job within 60 days can also get a free report.
The information on credit reports is divided into four sections. At the top are personal details about the individual and in other cases, variances of the Social Security number or person’s name because the information was incorrectly reported by a lender or any other involved entity. The second section is a compilation of most reports and has detailed data on lines of credit (trade lines). The third section has public records like tax liens, judgments, and bankruptcies. The bottom section contains a list of all parties that have recently asked to access the person’s credit report.
If you see an old address, one you hardly remember, it may cause you to wonder. How are these old addresses acquired by credit bureaus? What Information Is on Your Credit Report? Loan and credit information is not the only thing found on your credit report. It also contains personal information that verifies your identity. You will find all your previous and current addresses, previous and current employers, birthday, and name. Why Would an Old Address Be on a Credit Report? All the addresses where you have received bills before will show up on the credit report—more so loan and credit card statements. When the information is updated by creditors, the address information is also updated. If, for instance, your billing address changes and you inform your credit card issuer, they will report to credit bureaus. Your new address then gets added to your report.
The credit bureaus have a record of all your addresses, previous and current. They do not delete old addresses when you relocate. What they do is update the credit report, so it shows what your current address is, based on the reports of your creditors. Fortunately, your address has no effect on your credit score. It does not determine whether creditors accept your applications. Old addresses may be on your report because they do not hurt your score.
Most outdated information falls off your report after a while—but old addresses remain. So, you may find all the addresses where you have received bills or lived on your credit report. What If the Wrong Address Is Listed? Sometimes, your credit report may contain an address that you never lived at or show that you lived somewhere longer than you did. This could be because of identity theft or credit card fraud. Go through your entire credit report slowly and thoroughly, checking for any accounts that do not belong to you. Go an extra mile and assess your credit card statements. See if there are unauthorized charges. Also check the billing address. If there is a case of identity theft, report to the credit bureaus and creditors immediately for the fraudulent accounts to be cleared.
It is important to add a fraud alert, so the case never repeats itself in the future. This fraud alert ensures that potential creditors go an extra step to confirm your identity. There is also the option of placing a security freeze—it is free in the U.S. It locks your credit report and prevents new credit inquiries. Additionally, you can have inaccurate addresses removed from your credit report by using a credit report dispute. Note: do not rush to remove your old addresses. Sometimes they are used to confirm your identity. There is no need for you to report your current address to credit bureaus. Lenders and creditors have your current billing address and they report to the bureaus. When someone compromises your personal information, you will be at risk of arrest, denial of credit, unexpected tax bills and identity theft. Over the recent past, data breaches have increased in severity and frequency.
Many Americans have experienced the theft of personal information such as Social Security numbers and passport numbers. If, for some reason, you think that you are at risk of identity theft, you may want to consider a credit freeze. A credit freeze or a security freeze prevents businesses from making inquiries on your credit report. Without permission for creditors to access your credit report, it becomes harder for perpetrators to open any fraudulent accounts. Note: even with a credit freeze in place, you will be able to access your own credit score and report. Freezing and unfreezing credit reports is free with the major credit bureaus. All you must do is request for the freeze via phone or online and it will be applied in one business day. If you make the request by mail, it will be done in three business days. You will have a PIN provided by the bureaus or you (depending on the bureau) with which you can lift the freeze.
You can also decide to lift the freeze temporarily and specify the duration of the lift. If you want faster results while asking for a temporary lift, you are better off asking over the phone or online. The freeze will be lifted in an hour. If you request the lift by mail, you can expect the lift to be effective in three business days. Note that a freeze will not prevent companies from pulling your report to see if you are right for credit card offers. And do not be surprised if you still receive pre-approved credit offers with a freeze in place. If you like, you can also ask smaller credit bureaus to freeze your report. But you may be charged a fee for freezing and unfreezing. Your other option to protect yourself against identity theft is a fraud alert. But it is weaker than a credit freeze. A fraud alert forces companies to verify your identity using additional steps before they can access your report.
With a credit freeze, a company can only check your report once it is lifted. There is another subscription-based service offered by the major credit bureaus. It works like a credit freeze. You lock and unlock your report via a mobile app online. For this service, you must pay a monthly fee—the amount varies by credit bureau. Warning: note that this subscription-based service is not governed by federal law. They can change the terms as they wish. Should You opt for a Credit Freeze? A credit freeze will not guarantee your protection 100%. For instance, a company may decide to give a loan without checking your credit. Additionally, there are other types of crimes such as tax crimes that can be committed using your personal information. So, this is entirely up to you.
