White Sands Legal Office
While we progress through life, working and acquiring things to make life more comfortable, financial and governmental institutions are meticulously gathering records of our financial transactions. These records are being submitted to third-party agencies, known as credit bureaus or credit reporting agencies. The CRAs aggregate this data into a financial “snapshot” known as a credit report, or more specifically a credit score. The contents of these reports can have a dramatic impact on everything, from our ability to open a store credit card, to being granted a security clearance. For all their power, credit reports and credit scores are intentionally opaque and for many people, they remain a mystery.
A credit report is a record of your credit history pulled together from a number of sources such as the government, banks, and debt collectors. This record is run through a mathematical calculation, which reduces this mass of data down to a single number, known as your credit score. Credit scores indicate your credit worthiness, i.e. the risk involved with lending you money. Credit scores range between 200 and 850. The higher the number, the better your credit. A good credit score can increase the amount of money available in a loan and reduce the interest rate you must pay on any borrowed money.
As referred to above, credit reports are maintained by credit bureaus/CRAs. Each use a proprietary algorithm (calculations) to determine a credit score. It is not uncommon to receive different credit scores from the different CRAs. The three major CRAs are Equifax, Experian, and TransUnion. There are variations between who they pull data from, but they will all consider:
•Your employment data.
•A list of your creditors, including both fixed loans and revolving credit.
•Your payment history for any loans.
•Your total debt load.
•Financial defaults and court settlements such as bankruptcies, foreclosures and other court judgments.
The information in your credit report is of course personal, and as such, only certain entities are allowed to access this information. Potential lenders may access this information if permission is given, which is typically part of the loan application process. Employers may access credit history during the hiring process, again only with permission. Finally, certain government agencies are specifically authorized access to credit history by law. For example, the Department of Defense will check credit reports when determining if a security clearance can be granted to a Soldier.
As an individual you can always access your own credit history. By law, you may get one free credit report from each major credit bureau per year. Additionally, you may get a free credit report if:
•You have been denied credit within 60 days.
•You are unemployed and will be applying for a job within the next 60 days.
•You receive public assistance.
•You have reason to believe that your report contains inaccurate information due to fraud. Victims of identity theft also have rights to free reports.
You may obtain a free credit report from each credit bureau annually by going to www.annualcreditreport.com. This is the only official site directed by federal law. Be cautious of ordering a credit report from any other website or service promising free credit reports.
Once you have received your credit report, you should review all entries to ensure they are accurate and current. If you detect any inaccuracies, or false entries, each credit bureau has a process for challenging and correcting entries. This process will be detailed in your credit report and is also available from each organization’s website:
It is highly recommended that you review your credit reports at least annually. Contact the White Sands Legal Office at (575) 678-1263 and make an appointment with the legal assistance attorney.