CREDIT
who needs it?

How consumers use credit, how they pay bills, and when tenants pay  rent, all affect the ability to obtain credit or rent housing in the future.

If you are applying for credit, have been denied credit, or just want to know what credit information is available about you or someone you might rent to, you should first know the law.

	FCRA - Fair Credit Reporting Act
	CRAs - Credit Reporting Agencies
	Credit File Information
	Obtaining Your Credit Report
	Correcting Credit File Information
	Credit File Confidentiality
	Credit Repair Companies
	Rebuilding Your Credit File
	Securing a credit card
	Cosigner or Guarantor
	Tenant Screening With CCRs

The Federal Fair Credit Reporting Act

       FCRA, as amended September 30, 1997, with the Consumer Credit Reform Act (Amendments) allows Credit Reporting Agencies (CRAs) to assemble personal credit information and disseminate the data to subscribers with a legitimate business purpose. It also guarantees certain individual rights by regulating how your credit information can be collected and sold.

      You can read the entire act or check the key revisions contained in the Amendment that effects landlords and tenants in this RHOL credit web.

      We have compiled the the following general information from various sources to explain the purpose of a credit reporting agency, the steps necessary to obtain the information in y credit file and other facts on how credit information from Credit Reporting Agencies may be used.

Credit Reporting Agencies

       Credit reporting agencies (CRA) or credit bureaus, are companies that gather detailed information on how consumers use their credit, then sell this information to credit granting companies such as banks, retailers, credit card companies - and recently a great many landlords. The CRA may also require credit granting businesses to reciprocate by regularly supplying (often monthly) their credit experience with an individual. In most cases that compilation is derived automatically from a business accounts receivable database and electronically transferred to the CRA. If a payment was due on the first, but wasn't paid until the fifteenth, the CRA would have that information in their credit file by the following month.

      There are now three major CRAs: Equifax, Experian, (formerly TRW), and Trans Union, (formerly a railroad), who have compiled large databases of the information collected by local credit bureaus. They sell access to their data in a manner regulated by the FCRA. The CRAs were originally regional, and because of their relationships with local credit bureaus, their databases may not all contain the same information.

      The information that is sold by credit granting companies is usually assembled in a standardized, automated and coded format called consumer credit reports (CCRs). The CRA does not actually grant credit, the information they sell from a credit file helps subscribers decide to grant or withold credit.

      Credit grantors usually subscribe to a CRA by paying a membership fee and a small additional fee for each credit report they receive. An indivedial's credit file should only be available to those companies who have a legitimate business purpose for access to the information.

      In addition to credit grantors, there may be potential employers, landlords, or insurance underwriters, who request information from a credit file. RHOL landlord members can purchase credit reports through our organization as a part of their tenant screening process.

Credit File Information

The CRA includes the following information in a credit file:

	General identification information that includes social security number, address, previous address and marital status.
	Employer's name, address, and your estimated income when available.
	Payment history that includes the names of an individual's creditors, how much and what kind of credit they are using (installment, open, revolving), and how they are repaying or have repaid the credit (payments on time or late, delinquent balance).
	Collection accounts or those that have been written off as bad debts.
	Inquires of a credit file, such as the names of credit granting businesses who have requested the credit history in the last six months, and employers who have requested a report for employment purposes in the last two years.
	Public record information that includes any judgements, bankruptcies, foreclosures, and tax liens.

       There is a time limit for reporting negative information in a credit file. According to the Federal Fair Credit Reporting Act, delinquent payments can be reported for no more than seven years; personal bankruptcies for no more than ten years.

Obtaining Your Own Credit Report

      The FCRA also allows you to review information in your credit file at the credit bureau or agency. If you have been denied credit based on information in your credit report, the credit grantor must advise you of that fact, and provide you with the name and address of the credit reporting agency making the report. When you receive the credit grantor's response, you may send a copy of the letter to your local credit reporting agency and request information in your credit file. If you do so within 30 days there can be no charge to you.

      If you have been denied credit or housing based on a credit report, and you request your credit report from one of the three major credit reporting agencies, you may want to request copies of your credit file from the other two major CRAs. Remember their data may differ, so obtaining copies of your credit file from all CRAs will help prevent inaccurate reporting. You may also write the CRA and request an appointment to review your credit report.

      If you have not been denied credit, but simply want to know what information is in your credit file, you may write or call the credit reporting agency. The CRA should verify who you are by asking for identifying information, such as current address and social security number, before it releases the credit information. You may be charged a fee ranging from $5 to $20 or more for the credit report. A typical price recently advertised on the Internet is $14.95. Remember, if you were recently denied credit or housing, there may not be any charge. There is usually more than one CRA in your area that maintains a credit file on you, so it may pay to contact the other CRAs for all the available information.

	CBI/Equifax Credit Information Service, PO Box 740241, Atlanta GA 30374-2041 800-685-1111
	Experian (TRW) Consumer Assistance, P.O. Box 949, Allen, TX 75002 800-682-7654
	Trans Union Consumer Relations, P.O. Box 390, Springfield, PA 19064 MASS 800-888-4213 All other: 800-858-8336

Correcting Credit File Information

      After receiving and reviewing your credit file, you might find information that you believe is incorrect. If that happens you may write the credit reporting agency and request that they check and verify any information you dispute.

      The CRA is required by the Fair Credit Reporting Act to check the claim within a "reasonable period," usually 60 days. If the disputed item is wrong, the CRA must correct it. If the CRA cannot verify the disputed item, it must delete it from your credit file. An item might also be deleted if the CRA asked the credit grantor who had reported it to check the disputed claim but did not receive a response within a reasonable time. However, if the CRA later finds that it did report the deleted item correctly, this item may again be reported. Generally, the CRA will advise you of whatever action it takes regarding the disputed claim.

      If a correction is made, you should request that the CRA send a notice of the correction to any creditor who has checked your credit file in the past six months. If you question an item in your credit file that the CRA has told you it will not change, you may send a 100 word, or less, comment explaining your side of the story, which the CRA is required by federal law to send to any future inquirers.

Credit File Confidentiality

      Because confidentiality of your credit file is required by the FCRA, the federal government takes a strong position in ensuring that companies who request information from your credit file keep the information confidential. The substantial fines and penalties for anyone who violates the FCRA have been increased with the September 30, 1997 Amendment.

      The Federal Trade Commission (FTC), which oversees the FCRA, charged one of the major credit reporting agencies with the unauthorized use of credit files to create prescreened mailing, or telemarketing lists, without a subsequent offer of credit to every other person whose name appeared on the list.

      The FTC also charged a company, that purchased consumer credit information and resold it to others, with failing to insure that purchasers of this information had legally permissible purposes for obtaining credit information. According to the Commission, the FCRA requires credit bureaus to have reasonable procedures to ensure that only those with permissible purposes obtain credit reports.

      In a recent case, one of the three major CRAs was offering credit reports over the Internet to individuals without an adequate means of verifying the identity of the person requesting the information. They have ceased and desisted.

      Before RHOL will release a copy of a tenant's credit report we must have a signed authorization in our possession. In most cases, an application to rent a property contains permission to verify information and check credit. RHOL landlord members sign an agreement that allows them to fax a signed copy to us.

Credit Repair Companies

      When someone has been denied housing or credit based on information found in their credit file, they may be tempted by the wild claims from credit repair companies promising to fix your credit. Some of them advertise regularly on TV and make it sound as if they can fix anything. They usually charge high fees for their service and allege they can remove any negative information from anyone's credit history. However, you can generally do anything a credit repair company can do yourself for free or only a few dollars, .

      Here's how: Credit repair companies usually rely on the section in the FCRA that allows you to request that a CRA re-verify any disputed claim in your credit file. Because the FCRA requires the CRA to check these claims within a reasonable period, credit repair companies try to overwhelm the system by sending so many verification letters to the CRA all at once that it becomes impossible to check all the claims within a reasonable period. In that event, they are forced to delete the negative information.

      To help protect the validity of their data, many CRAs now consider re-verification checks requested by credit repair companies "frivolous," which means they may not be required to reinvestigate the disputed information. However, personal requests from you must be acted on.

Rebuilding Your Credit File

      Generally, seven to ten years time is the only thing that will "fix" your credit report. Information in your credit file will only be changed if items are actually wrong, or beyond the seven (or ten) year reporting period, required under federal law. However, there are measures you can take to improve your chances for receiving credit in the future, even if you have been denied credit and find negative information in your credit file at the CRA.

	Catching up with payments: There is no substitute for paying bills on time. If you have received credit in the past but have made late or delinquent payments, you may wish to contact your creditors directly and request a reduced payment plan with them.
	Pay judgements: Any judgement against you that is part of the public record is reported on your credit report. Judgements may also be reported as paid, which removes most of the negative connotation. When a tenant is evicted for non-payment of rent, there is usually a money judgement granted to the landlord at the same time.
	Write letters of explanation: If your credit was damaged as a result of a medical emergency or divorce, write a short explanation to be attached to your file.

      If your best efforts are unsuccessful, consider contacting a credit counseling service like the nonprofit Consumer Credit Counseling Service (CCCS), which has chapters in many cities, or the Credit Guard of America Web page. But be careful who you deal with. Some credit counseling organizations, even some that are nonprofit, may charge large fees and perform services of little or no value.