CREDIT HISTORIES AND RECORDS

CREDIT HISTORIES AND RECORDS



Building Up a Good Record


On your first attempt to get credit, you may face a common
frustration: sometimes it seems you have to already have credit
to get credit. Some creditors will look only at your salary and
job and the other financial information you put on your
application. But most also want to know about your track record
in handling credit--how reliably you've repaid past debts. They
turn to the records kept by credit bureaus or credit reporting
agencies whose business is to collect and store information
about borrowers that is routinely supplied by many lenders.
These records include the amount of credit you have received
and how faithfully you've paid it back.

Here are several ways you can begin to build up a good
credit history:

-- Open a checking account or a savings account, or both.
These do not begin your credit file, but may be checked as
evidence that you have money and know how to manage it.
Cancelled checks can be used to show you pay utility bills
or rent regularly, a sign of reliability.

-- Apply for a department store credit card. Repaying credit
card bills on time is a plus in credit histories.

-- Ask whether you may deposit funds with a financial
institution to serve as collateral for a credit card; some
institutions will issue a credit card with a credit limit
usually no greater than the amount on deposit.

-- If you're new in town, write for a summary of any credit
record kept by a credit bureau in your former town. (Ask
the bank or department store in your old hometown for the
name of the agency it reports to.)

-- If you don't qualify on the basis of your own credit
standing, offer to have someone cosign your application.

-- If you're turned down, find out why and try to clear up
any misunderstandings.


What Laws Apply?


The following laws can help you start your credit history
and keep your record accurate:

THE EQUAL CREDIT OPPORTUNITY ACT gives women a way to
start their own credit history and identity.

THE FAIR CREDIT REPORTING ACT sets up a procedure for
correcting mistakes on your credit record.


Credit Histories for Women


Under the Equal Credit Opportunity Act, reports to credit
bureaus must be made in the names of both husband and wife if
both use an account or are responsible for repaying the debt.
Some women who are divorced or widowed might not have separate
credit histories because in the past credit accounts were
listed in their husband's name only. But they can still benefit
from this record. Under the Equal Credit Opportunity Act,
creditors must consider the credit history of accounts women
have held jointly with their husbands. Creditors must also look
at the record of any account held only in the husband's name if
a woman can show it also reflects her own creditworthiness. If
the record is unfavorable--if an ex-husband was a bad credit
risk--she can try to show that the record does not reflect her
own reputation. Remember that a wife may also open her own
account to be sure of starting her own credit history.

Here's an example:

Mary Jones, when married to John Jones, always paid their
credit card bills on time and from their joint checking
account. But the card was issued in John's name, and the credit
bureau kept all records in John's name. Now Mary is a widow and
wants to take out a new card, but she's told she has no credit
history. To benefit from the good credit record already on the
books in John's name, Mary should point out that she handled
all accounts properly when she was married and that bills were
paid by checks from their joint checking account.


Keeping Up Credit Records


Mistakes on your credit record--sometimes mistaken
identities--can cloud your credit future. Your credit rating is
important, so be sure credit bureau records are complete and
accurate.

The Fair Credit Reporting Act says that you must be told
what's in your credit file and have any errors corrected.

Negative Information. If a lender refuses you credit
because of unfavorable information in your credit report, you
have a right to the name and address of the agency that keeps
your report. Then, you may either request information from the
credit bureau by mail or in person. You will not get an exact
copy of the file, but you will at least learn what's in the
report. The law also says that the credit bureau must help you
interpret the data--because it's raw data that takes experience
to analyze. If you're questioning a credit refusal made within
the past 30 days, the bureau is not allowed to charge a fee for
giving you information.

Any error that you find must be investigated by the credit
bureau with the creditor who supplied the data. The bureau will
remove from your credit file any errors the creditor admits are
there. If you disagree with the findings, you can file a short
statement in your record giving your side of the story. Future
reports to creditors must include this statement or a summary
of it.

Old Information. Sometimes credit information is too old
to give a good picture of your financial reputation. There is a
limit on how long certain kinds of information may be kept in
your file:

-- Bankruptcies must be taken off your credit history after
10 years.

-- Suits and judgments, tax liens, arrest records, and most
other kinds of unfavorable information must be dropped
after 7 years.

Your credit record may not be given to anyone who does not
have a legitimate business need for it. Stores to which you are
applying for credit or prospective employers may examine your
record; curious neighbors may not.

Billing Mistakes. In the next chapter, you will find the
steps to take if there's an error on your bill. By following
these steps, you can protect your credit rating.