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Credit bureaus are credit reporting agencies (CRAs) that collect information about consumers and provide it to banks, credit card companies, employers, prospective landlords, etc. The three major CRAs are Experian (, Equifax ( and TransUnion (

CRAs access your payment information directly from the companies you have credit with, as well as from government agencies such as the legal court system. They use this historical information to create your credit report. This detailed consumer report tells everything about you, including where you work and live, timeliness of your bill payments on time and whether you've ever been arrested, sued or filed for bankruptcy.

Credit bureaus use the information in your credit report to determine your credit rating on the day it's requested. Your credit score is important because most lenders will use it to automatically judge if you're a good credit risk. Credit scores, also known as FICO cores, generally range from 350 to 850. Most lenders will work with you if your score is at least 620. If your rating is 720 or higher, they'll consider you the most trustworthy type of borrower and offer you their best (lowest) interest rate.

Generally, your credit score is determined by your payment history for the latest two years. Technically, CRAs calculate your score using a closely-guarded formula. TransUnion, for example, determines credit scores using a variety of factors, including:

How you're paying your accounts
How much money you currently owe
How long your accounts have been open
What different types of credit you use
How much credit you use compared to the amount of credit you have available
How often and how recently you've applied for credit.

Checking Your Credit Report

You should obtain a copy of your credit report (from any of the three major credit bureaus) at least annually and check it for accuracy. As you review your report, make a list of items that are incorrect, out-of-date or misleading. In particular, look for mistakes in your name, address, phone number, Social Security Number, and for missing or outdated employment information.

Also, be on the look out for the following: bankruptcies that are more than 10 years old, any negative information that is more than seven years old, credit inquiries more than two years old, credit accounts that are not yours, incorrect account histories (especially late payments that you've made on time), closed accounts incorrectly listed as open. You should also note any account that is not listed as "closed by consumer" because the account will appear to have been closed by the creditor in question.

Repairing Your Credit History

You can repair questionable items in your credit history yourself. Or you can get help from credit experts such as Credit Repair Whiz, a consumer advocacy company that helps educate and protect people from credit abuses and unfair practices.

As a consumer, you have the specific rights under the Fair Credit Reporting Act. For example, you are entitled to a free copy of your credit report if you've been denied credit, insurance or employment and request the report within 60 days of notice, or if you can prove that (1) you're unemployed and plan to look for a job within 60 days, (2) you're on welfare, or (3) your report is inaccurate because of fraud.

Also, if your application for credit, insurance, or employment is denied because of inaccurate or incomplete credit information, the company to which you applied must give you the name and address of the reporting credit bureau.

There is no charge to dispute mistakes or outdated information on your credit record. Simply ask the credit bureau for a dispute form and submit it with any supporting documentation. For more information, contact Equifax at 800-685-1111, Experian at 888-397-3742 or Trans Union at 800-916-8800.

7 Essential Tips to Improving your Credit History

Under the Fair Credit Reporting ACT, CRAs and their information providers must work with you to correct any inaccurate or incomplete items in your credit report. Here's how you can start improving your credit history:

• Tell the CRA in writing what information you believe is inaccurate. Include copies (NOT originals) of documents that support your position. Clearly identify each item in your report, state the facts and explain why you dispute the information, and request deletion or correction. Send your letter by certified mail, return receipt requested, so you can document what the CRA received. Keep copies of your dispute letter and enclosures.
• CRAs generally must investigate the items in question - usually within 30 days. They also must forward all relevant data you provide about the dispute to the information provider. After the information provider receives notice of a dispute from the CRA, it must investigate, review all relevant information provided by the CRA, and report the results to the CRA. If the information provider finds the disputed information to be inaccurate, it must notify all nationwide CRAs so they can correct this information in your file. Disputed information that cannot be verified must be deleted from your file.
• CRAs must make necessary repairs to all appropriate items. If your report contains erroneous information, the CRA must correct it. If an item is incomplete, the CRA must complete it. For example, if your file showed that you were late making payments, but failed to show that you were no longer delinquent, the CRA must show that you're current. Or if your file shows an account that belongs only to another person, the CRA must delete it.
• When the investigation is complete, the CRA must give you the written results. They must also give you a free copy of your report if the dispute results in a change. If an item is changed or removed, the CRA cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the CRA gives you a written notice that includes the name, address, and phone number of the provider.
• At your request, the CRA must send notices of corrections to anyone who received your report in the past six months. If an investigation doesn't resolve your dispute, you should ask the CRA to include your statement of the dispute in your file and in future reports.
• In addition, tell the creditor or other information provider in writing that you dispute an item. As with the CRAs, include copies (NOT originals) of documents that support your position. If the provider then reports the item to any CRA, it must include a notice of your dispute. In addition, if you are correct and the disputed information is not accurate, the information provider may not use it again.
• If your credit file does not reflect all your credit accounts, work on updating it. Most national department store and all-purpose bank credit card accounts will be included in your file, but not all creditors supply information to CRAs. Some travel, entertainment, gasoline card companies, local retailers, and credit unions are among those creditors that don't. If you have accounts with creditors that don't appear in your credit file, ask the CRA to add this information to future reports. Although they're not required to do so, many CRAs will add verifiable accounts for a fee.