Consumer credit information is obtained and stored in the United States by three major credit bureaus, Experian, formerly known as TRW, Trans Union Corporation and Equifax.

Credit reports contain significant information on more than 190 million Americans, about the entire adult population of the United States. These reports include your name, date of birth and social security number.

Offered in the reports for lenders to see are your lists of credit card accounts, including credit limits, your outstanding balances, payment history (late payments) for each account, your current loans, and any bankruptcies, civil judgments or liens against you. The credit report should also state the name of any company who has requested a copy of your report.

The biggest complaint that most people have about these credit reporting services is that they are often inaccurate, and getting the problem corrected is time-consuming and often difficult. An astonishing two out of five people are reported to have one or more errors on their consumer credit reports, so the odds of your having an error are high. When credit reporting companies make a mistake, they don't incur any penalty, but you well might.

Although these credit reporting services include instructions and contact information so that you can correct mistakes on your reports, the damage could already be done. An inaccurate report that cannot be quickly cleared up can cause you to miss getting a loan on time to get your dream house. You may have to wait as long as 30 days to hear that a complaint has been corrected. And you will have to supply the corroboration that the account is in fact paid in full, or paid on time, etc. A canceled, dated check will do nicely.

Not anticipating that there might be a problem, people often wait to check their credit reports until they apply for a loan. Then they find out from the lender that there is a problem. If you are able to show proof that the report is in error, the lender will usually proceed with the loan, but s/he will insist that the credit reporting service post the correction before the loan goes through. If the lender is not satisfied that this has been done before closing, s/he may opt to close the loan at a higher rate or put off closing until the information has been posted.

As you can see, either way, it will be a nightmare for you if there is a problem. That's why you should review your credit report before you go to a lender.

You will have to see the reports from each of the credit reporting services. One report isn't enough. Again, you will be surprised at how often they are out of date, or inaccurate. And they don't accept information from each other. If you call Experian and say that Trans Union's report is correct but Experian's isn't, they will still make you prove the error.

So you have a choice - contact each of the credit reporting companies separately or use a new service which offers access to all three from one convenient site. QSpace, makers of iCreditReport.com, is the first service to deliver credit reports in real time over the Internet. iCreditReport.com gives Internet users the ability to access their credit files at any time, determine if their report contains information or inquiries that they do not recognize, and challenge inaccuracies more rapidly. iCreditReport.com allows users to instantly receive their personal credit reports over the Internet for $8 a report.

iCreditReport.com offers users a quick and secure method which includes the highest encryption protocols for securing transmissions, for users to monitor their personal credit records online. The proprietary system authenticates your I.D., then will release credit information to you in a secured environment.

In order to ensure privacy on the user's side, the service does not use unsecured connections such as email, nor doe it store credit reports on its servers once the transmission is complete.

Watch Out for Credit Scoring

Lenders also get more than the credit report when they access credit rep orting company records - they get a score or a credit rating on the borrower. The score indicates a statistical probability that the borrower will default on the loan.

According to real estate columnist, Robert Lee, innocent maneuvers to consolidate your debts can inadvertently cause your score to go up. Lee advises caution when canceling many cards with small balances and then shifting the debt to a single or fewer cards.

"The maneuver will effectively raise the ratio of your unpaid balances to the maximum credit lines available on fewer cards. To the software (used by the online lenders,) it appears as if your financial situation has tightened," says Lee.

So not only do you have to worry about your balances but the score they produce.

Lee explains that quick fixes won't help you get the loan, but that there are some strategies you can follow to raise your score. One of them is paying a visit to Fair, Isaac and Co. Inc., a company which developed credit scoring for mortgage applications. The site includes consumer information on credit scoring. Used by both the site offers information on how credit scores are developed and used and how they can be improved.

Once you obtain a credit report, even if it is all in order and your credit is good, you will not be able to use the report to get a loan. Your lender will still want to run his/her own credit check, but at least the report will be a step in the right direction toward getting you pre-qualified and prepared to buy.

A word of caution. The reason lender fees are so high for credit report checks is that they typically will run your credit report a second time, right before closing. So when you hear that your loan has been approved, don't do anything foolish like go out and run up a lot of bills. Every action will show up on the credit report.

Many closings have been delayed or canceled because the lender has found out something new that changes the dynamics of the loan. Don't allow your closing to be one of them.

Published: January 20, 1999

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