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Rebuilding Credit FAQs

How is data about credit obtained?

An important part of rebuilding credit is gaining an understanding of how credit bureaus collect and report debt. Credit bureaus obtain credit data from creditors and from public records. Creditors provide information about past and present credit history, including the credit limit on accounts, the amount of credit available, the date an account was opened, payment amounts, and late payments. Credit bureaus also search public records for data about bankruptcies, liens against real property, and overdue child support payments.

A credit file also contains personal information about the consumer, such as previous names, the consumer's date of birth and Social Security number, previous addresses, and employment history.

Credit bureaus sell reports to creditors, employers, banks, landlords, debt collectors, child support enforcement agencies, and mortgage lenders that have the right to obtain this information. Three main credit reporting companies compile credit reports -- Equifax, Experian, and Trans Union.

What are my rights under the Fair Credit Reporting Act?

The intent of the Fair Credit Reporting Act (FCRA) is the promotion of accuracy and privacy of consumer information collected by credit bureaus. A consumer has the following rights:

  • The right to know the information in a credit report that was used to deny an application for credit, employment, insurance, or for any other adverse action
  • The right to know what is in a credit file
  • The right to dispute inaccurate or incomplete information
  • The right to know a credit score
  • The right to limit access to a credit file
  • The right to limit "prescreened" offers

How do I get a copy of my credit report?

A consumer may obtain a free annual copy of the credit reports compiled by Equifax, Experian, and Trans Union by ordering them online at www.annualcreditreport.com, by downloading a request form and mailing it to the appropriate address, or by calling 1-877-322-8228.

A consumer also has the right to a copy of a free credit report under the following circumstances:

  • A denial of credit or another adverse action was taken based on information in your credit report within the past 60 days
  • You are unemployed and will be seeking work within the next 60 days
  • The report contains errors because of fraud (one free copy every 12-month period)
  • You are receiving public assistance (one free copy every 12-month period)
  • The report has been revised after the completion of an investigation requested by the consumer

A consumer can also request a copy of a credit report by paying a fee to the credit bureau.

How long can a credit reporting company continue to report negative information?

Negative information about late payments, collection accounts, judgments, unpaid child support, and paid tax liens can remain on a credit file for up to seven years. Unpaid tax liens can remain indefinitely (depending on the state) and negative information about government insured or guaranteed student loans may remain on a credit report for more than seven years.

A Chapter 7 or 11, or an undischarged or dismissed Chapter 13 bankruptcy, will typically remain on a credit record for up to 10 years from the date filed. A discharged Chapter 13 bankruptcy, however, will generally stay on a credit file for seven years from the date filed.

Inquiries for approving requests for credit remain on a credit record for up to two years.

How do I correct mistakes on my credit report?

Under the law, if a report contains inaccuracies or unverifiable information, the credit reporting company must remove it or correct the information. Commonly, disputes arise over personal information, incomplete information about the type of bankruptcy, incorrect history about accounts, and closed accounts still reported as open.

A consumer can make a request for an investigation by initiating a dispute online, calling the credit reporting company, completing the investigation request form included in the copy of the report, or by sending a letter to the credit bureau responsible for reporting the incomplete or inaccurate information. The credit reporting company has 30 days, or 45 days if it is investigating information in a free annual report, to notify the consumer with the results.

Should I get a credit card to help rebuild my credit?

Rebuilding credit by obtaining a credit card can help establish a positive credit payment history. A credit card is a good way to reestablish credit as long as the consumer does not fall back into debt. Only charging what can be paid off when the bill arrives is the best way to remain debt free and rebuild credit.

Sometimes it is difficult to obtain a credit card when negative credit history remains in a credit file. A consumer can apply with a cosigner or can obtain a secured credit card. Secured card holders have a credit limit based on the amount of money deposited in a bank account. These credit cards typically have high interest rates of 25 to 30 percent, but do help a consumer establish a credit history.

Having just a few open credit cards is the most effective way to establish responsible credit management. While having more than one credit card will show a consumer's ability to manage debt, having too many open credit card accounts may affect a consumer's ability to obtain other credit.

Next Steps
Contact a qualified consumer attorney to assist with
any credit, banking, or finance issues you face.
(e.g., Chicago, IL or 60611)

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