Credit Bureaus and Your Financial Information

A credit bureau or credit reporting agency is in the business of gathering, maintaining and selling information about consumers' credit histories. It collects information about consumers' payment habits from credit grantors like banks, savings and loans, credit unions, finance companies and retailers. The credit bureau stores this information in a computer database and sells it to credit grantors in the form of credit reports.

When you apply for mortgage refinancing the lender or broker orders your credit report from at least one credit bureau and analyzes the information to decide whether to grant you credit. The credit bureau charges the lender a fee for every credit report sold.

Although credit-reporting agencies provide your credit report to lenders when you apply for credit, they do not make actual lending decisions. It is up to individual lenders to evaluate your credit report along with other factors they consider important and then decide whether or not to offer you credit.

A consumer credit report is a document that contains a factual record of an individual's credit payment history. Mortgage refinancing lenders are permitted by law to review your credit report to objectively determine whether to grant you credit. There are 190 million credit active people in the United States who have a charge account, car loan, student loan or home mortgage. As those people pay their bills, most lenders report credit payment information to credit bureaus. So most of the information in your consumer credit report comes directly from the companies you do business with.

A consumer credit report contains four types of information: identifying information, credit information, public record information and inquiries.

1. Identifying information includes:
   • Your name
   • Your current and previous addresses
   • Your Social Security number
   • Your year of birth
   • Your current and previous employers
   • If you're married, your spouse's name
2. Credit information includes credit accounts or loans you have with:
   • Banks
   • Retailers
   • Credit card issuers
   • Other lenders
3. Public record information includes any information that's contained in state and county court records, like:
   • Bankruptcies
   • Tax liens
   • Monetary judgments
4. Inquiries indicate to other credit grantors that you have applied for new credit that could result in additional debt. Potential lenders view multiple recent inquiries on your credit report as a sign that you are overextending yourself.

(A credit risk score may also be included when your report is provided to a credit grantor, although it is not included on consumer review reports. The ways to calculate and use a credit score vary widely, so a score has little meaning outside of the context of a particular lender's unique guidelines for use. Therefore, it is not included on consumer review reports.)

Your consumer credit report does not contain information about your race, religious preference, medical history, personal lifestyle, personal background, political preference or criminal record.

Positive credit information remains on your report indefinitely, although information about an account will cycle off your report if no new information is reported about it for seven years. (Thus, a closed account will disappear from your report seven years after it is reported closed by the credit grantor.)

Most negative information remains for up to seven years. Bankruptcies can remain on your credit report for up to ten years. Other public record information can remain for up to seven years.

Most inquiries stay on your credit report for up to two years.

A mortgage report is a special credit report that lenders use prior to deciding whether or not to extend you a home loan. Each report is compiled from credit reports from two or three credit bureaus. The mortgage credit reporting company purchases credit reports from the credit bureaus, combines them and manually verifies specific information such as employment, credit account balances and public record information.

Federal law carefully regulates how credit reports can be used and by whom. By law, you have the right to obtain your own reports at a reasonable price. Businesses must offer proof, before they can access consumer credit information, that they will be using the data for no other purpose than that allowed by federal law.

Copyright 2010 Writers Opinioin LLC