March 31st, 2019 10:25 AM by Jackie A. Graves, President
Don't get sidetracked by misinformation.
Most Americans apparently believe that unpaid traffic tickets can
affect their credit score, according to a recent survey
conducted by DriversEd.com, a service that provides online defensive driver education.
There's just one problem: It's not true, according to credit
Similarly, a report on Credit.com tells library scofflaws they
could have a stain on their credit history if they don't
pay their overdue book fines. Also not true.
Your credit history is key to so many aspects of your financial
life, from getting a good interest rate on a car loan or mortgage to passing muster
with an employer or landlord.
It’s a shock, then, to discover that there's a lot of
misinformation about what actually affects your credit report, which determines
the three-digit score that sums up your creditworthiness.
Here is a guide to what's true—and what's not—about what goes into
your credit report, according to experts at the credit reporting agencies that
put the reports together.
major U.S. credit reporting agencies—Equifax, Experian, and TransUnion—periodically udpate the
sources and methods of consumers' personal information to create their credit
But library fines aren’t among the types of debt that wind up on
your credit report, says Rod Griffin, director of consumer education and
awareness at Experian.
“Library fines were reported through municipalities and municipal
court records,” Griffin says. “We no longer collect that information.”
The Credit.com article suggests it's possible that a fine could go
to collections, and that the collections information could end up on your
credit report. Griffin refutes that.
"A library may work with a collection agency, but
municipalities have relationships with collection agencies that prohibit them by
contract from reporting," he says. "To my knowledge there are no
exceptions. We’ve removed all of that information."
unpaid bills—even the ones that don't go to collections—can affect your credit.
“Just one late payment can hurt your score and will remain seven
years from the date of the missed payment,” Griffin says.
The solution: Follow up on old accounts to make sure they're
really closed—and don't end up in collections because of a small amount of debt
left on them. And pay all your bills on time.
With a revolving credit account like a credit card or home-equity
line of credit, at least pay the minimum required by the end of the bill's
grace period. Timeliness of payments counts for 35 percent of your credit score, says FICO, the company that generates credit scores used for a
majority of consumer credit decisions.
Eric Ellman, senior vice president for public policy and legal affairs at the
Consumer Data Industry Association, which represents credit reporting agencies,
says he was once interviewed by a television reporter who’d received a speeding
ticket with a warning that drivers who didn’t pay would be reported to a credit
Turns out that threat was an empty one. “It’s not true,” Ellman
says. “Those don’t show up on a credit report.”
Griffin explains that tickets, like library fines, come from
municipal records. They’re no longer collected by any of the credit reporting
You may think you’re off the hook if the judge presiding over your divorce says
your soon-to-be-ex spouse must pay all the debt on your joint credit card. The
card company sees it differently.
While you are still husband and wife "you are both jointly
and severally liable for 100 percent of the card debt,” Ellman says. Even if
one spouse is responsible for paying back the debt, the other spouse could
start receiving collections calls and letters if the debt isn’t paid, he adds.
Ellman says those going through divorce should to work with
lenders. “If, for example, the husband is responsible for the debt, the couple
will need to work with the lender to take the wife’s name off of the
card," he says.
These infractions rarely make it onto credit reports, Ellman says.
“Liens and other judgments don’t show up on credit reports very
often,” he says. In part that's because in order for those public records to
appear on your credit report, certain personal information from those sources
must match what the credit reporting agency has on file about you.
“We’ve found that public records will almost never have both a
Social Security number and date of birth,” Ellman says. “So as a general rule,
most liens or judgments are not showing up on credit reports.”
As for unpaid and paid tax liens, those no longer appear on credit
“Neither paid tax liens nor unpaid tax liens are part of a credit
report any longer,” Griffin says. “They were removed from all credit reports
almost a year ago.”
Griffin confirms, though, that negative information in general
stays on your credit reports for seven years from the time of the first
“If you fall behind on an account and never again become current,
the consecutive late payments will be deleted seven years from the date of the
first missed payment,” he says. “That date is called the original delinquency
Ellman says a common misconception is that each time consumers check their
credit reports, their credit scores go lower.
“If I had a nickel for how many times I heard that, I could retire
today,” he says. “It’s an urban legend.”
You’re entitled to look at your credit reports as often as you
like. Consumer Reports maintains that you should do it several times a year, if
only to ensure that the information is accurate.
And you don’t have to pay a credit-monitoring service to do that
for you. Instead, because you are entitled to three free inquiries a year—one
from each of the credit reporting agencies—go to annualcreditreport.com and stagger your inquiries. Every four months, ask for one
of the reports—say, Equifax in April, Experian in August, and TransUnion in
It’s also a good idea to check all three of your credit reports
simultaneously before shopping for a major loan like a mortgage. Do it even if
you've used up your free reports and have to pay a bit to get new ones.
That way, you can correct errors before applying for the loan.
A 2013 report by the Federal Trade
that about 5 percent of credit reports had errors that could result in less
favorable loan terms.
If you find mistakes on any of the reports, you’ll need to ask for
corrections from each of the credit-reporting agencies showing the error.
Increasingly, consumers’ credit reports are being accessed by entities with no
plans to lend you money. Employers, insurers, and landlords can check on your
credit, but these inquiries have little or no impact on your credit report.
“If your prospective employer wants to look at your credit report,
you have to sign a consent,” Ellman says. “The law also requires that the
inquiry show up on your credit report. Similarly, if an insurer is looking at
your credit report as part of the application process, you are almost always
going to have to consent to letting the company pull your credit history.
“But inquiries from an employer or an insurer won’t have an impact
on your credit score,” he says.
Opening up a lot of credit cards in a short period of time can have a negative
impact. “That could have a downward effect on your score because it suggests
you’re in credit trouble,” Ellman says.
Freezing your credit reports is a way to curb the urge to take on
more debt—and, after a data breach, to foil scammers from opening credit lines
with your stolen personal information. It’s free to freeze your credit report.
Go to each of the three credit-reporting agencies and click the
link mentioning a credit or security freeze. Consumer Reports recommends doing such a freeze rather than a credit lock. That’s because a freeze’s promise
to guard your credit accounts is guaranteed by law, notes Christina Tetreault,
a staff attorney on the financial services team at Consumer Reports. A credit
lock is simply an agreement between you and the credit reporting agency.
“Having a contractual agreement is not as strong as having
protections under law,” Tetreault says.
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