Knowing credit report can help save money

Ryan Marshall, Carroll County Times Staff Writer

Anyone who’s ever bought a car, gotten a credit card or received a student loan likely has a credit report — and knowing what’s in it can save a lot of money.

The information in a credit report helps set an interest rate, which determines how much interest is paid on money borrowed.

Rod Griffin, manager of public education for Experian, said the information in a credit report is gathered from public records and previous applications for credit.

Experian, along with Equifax and TransUnion, are the main credit reporting agencies in the United States.

The information can include your name, address, Social Security number and information on any bankruptcies, tax liens or civil judgments against you.

Not included is information about savings or checking accounts, individual retirement accounts, investments or assets, Griffin said.

Along with the personal information, credit reports also track inquiries — a record of who has looked at your report.

Griffin said inquiries are divided into two categories: hard and soft.

Hard inquiries come when you initiate a credit transaction, such as opening a new charge card at a local department store.

Soft inquiries are produced when you don’t apply for credit but someone else checks your report, such as for pre-approved credit offers.

Soft inquiries only show up on copies of a credit report that you receive, while hard inquiries are visible to anyone who looks at the report.

Inquiries usually only affect credit if you already have credit issues such as missed payments, Griffin said. He said they are never the only reason someone’s request for credit would be declined.

Credit reports also keep records of whether you pay your bills on time.

Missing payments or having them arrive late can drive down your credit score, the numerical value assigned to your credit.

The scale for credit scores goes up to 850, with a good score usually considered to be anything above 720, said Neil Harrington, from M&T Bank’s consumer loans division.

The score is determined by factors such as the amount of credit someone has and how it’s being used and whether payments have been made on time, Harrington said.

Plenty of people don’t understand how important having good credit can be, said Elizabeth Schomburg, senior vice president at Family Credit Counseling Service, a nonprofit created to educate the public about debt and work with people who are struggling with it.

One of her company’s jobs is to help educate people on what the information in a credit report means and how they can use it to their advantage.

Many people only think about their credit report when they’re getting ready to make a major purchase, she said.

But Schomburg said the information in the report is affecting peoples’ lives more and more.

Potential employers and landlords can check credit reports, she said. They can even be used by insurers to check rates.

Having good credit is often looked as a sign of responsibility, she said.

Congress passed the Fair Credit Reporting Act in 1970 and amended the act in 1996.

Under the act, employers can’t access the report without your written permission.

Reports can be accessed by a court order, federal grand jury subpoena or sometimes to help determine child support payments.

“Not just anyone can get a copy of a person’s credit report,” Griffin said.

In order to get information, a company must subscribe to Experian’s services and meet the company’s security requirements.

Even if a company does qualify, it’s limited in how it can use the information, Griffin said.

Experian often deletes information such as account numbers, dates of birth or other data that aren’t related to the inquiry.

The information in the report can be a useful tool to help fix bad credit.
Griffin recommended getting a copy of your report from all three major credit reporting agencies. No one can do anything about credit problems until they know what’s in their report, he said.

The key to remember is that managing credit is a working process, Schomburg said. Most people’s credit didn’t go bad overnight, and it won’t be fixed overnight.

Reach staff writer Ryan Marshall at 410-857-7865 or ryan.marshall@carrollcountytimes.com.


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