The fifth in a six-part series replaying a credit scoring and reporting question and answer session CreditCards.com held with Experian.
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Click the links below to watch the video replay or read a transcript of our credit reporting Q&A with Experian in its entirety or in six separate parts.
On Thursday, May 6, 2010, Experian director of public education Rod Griffin answered your questions on credit scoring and credit reporting live via a video stream from the CreditCards.com studio in Austin, Texas.
Below is the fifth of six parts of the video replay of that event — which was moderated by CreditCards.com editor-in-chief Dan Ray — as well as a lightly edited transcript of the video.
Griffin covered a wide range of topics in the 45-minute chat. If you missed it or just want to see it again, you can watch it below or check out our event page at CreditCards.com/AskExperian.
And don’t forget, we’ve also got dozens of helpful videos in our complete video archive here at CreditCards.com. That includes a reply of our first live video event — a question-and-answer session on credit card reform with one of President Obama’s key economic advisers.
The following is a lightly-edited transcript of the above part of CreditCards.com’s recent question and answer session on credit scoring and credit reporting with Experian. User questions are in bold.
(0:06) RAY: Liz wants to be reassured. “Someone said that bankruptcy doesn’t come off your credit report unless you call to have it removed. Is that true or do you automatically remove it after seven to 10 years?”
GRIFFIN: We automatically take it off, so we track from the filing date we’ll watch that, and we’ll remove the bankruptcy automatically. So, Chapter 13 Bankruptcy under which you repay a portion of the debt, is taken off after seven years from the filing date. Chapter 7 Bankruptcy remains for 10 years because you don’t repay any of the debt so it stays a little bit longer but we’ll monitor that. Now again, I would encourage you to get your credit report at least once a year. Make sure everything’s there, if it should have come off, you can follow the instructions for contacting us and make sure that it gets removed, but it should come off automatically.
(0:48) RAY: We’re just at about 30 minutes, but it looks like we’re going strong. Can you stick around for a while longer?GRIFFIN: Absolutely, be glad to.
(0:56) RAY: Great. Jerry and Judy ask very similar questions, Judy asks, “What’s the difference between all the different credit reporting agencies?” And Jerry asks, “Why will credit reports vary from agency to agency? I’ve subscribed to Experian on the 3 in 1 type account, sometimes the same information; sometimes not.”
GRIFFIN: Sure, and the reason is because we’re competitors. So the example I use is think of the three large auto manufacturers. Ford, Chrysler, and General Motors. Experian, Transunion, Equifax are very similar. We’re competitors, so we compete on the information we have that credit reporting, the quality of the credit reporting that we provide, so what will happen is that the vast majority of lenders report to all three of us but they may not report at the same time so normally, the reason for any difference is that one of your lenders has reported information to us and updated information but not yet at one of the others so you may see that discrepancy there. In some cases, small, regional, or local lenders may only choose to report to one or two of the credit reporting agencies and not all three. It’s one of the things that’s often not understood about the Fair Credit Reporting Act is that it doesn’t require lenders to report it simply says if you choose to, here are the things you have to do.
RAY: That’s probably an important question for consumers to ask, right?
GRIFFIN: Yes, and I always encourage consumers that if you’re working with a small bank or another lender and you’re not sure, ask them if they report your credit account to the credit reporting companies because that’s essential to building your credit history.
(2:28) RAY: And Marie asks a question that I think brings up another important consumer strategy, “How many times can my credit be checked for a car loan before my score is lowered?”
GRIFFIN: Sure, and the answer is, as many times as is required within typically a 14 day period, with mortgage loans and auto loans credit scoring systems count all auto inquiries and all mortgage inquiries within a 14 day period as a single inquiry. So auto dealers, for instance, do something we call shot-gunning. They’ll send your application to a bunch of different lenders to try to find the best rate and that’s recognized you’re only buying one car you’re not opening 20 different auto loans, so the credit scoring systems recognize that and count all those inquiries as a single inquiry. So you don’t need to worry about the inquire affecting your credit score for an auto loan if you apply within a short period of time and most people do.
(3:24) RAY: And this looks like it’s getting a little bit out of your scope, but we might be able to shed some light on it anyway, Denise asks,in regards to a charge off, “Why can a collection agency report the charged off debt as a new debt with a newer, altered account number and the original charged off debt still appears even though it was sold to the collection company?” So she’s got a problem with debts showing up twice on a report.
GRIFFIN: And they shouldn’t. And again, the fact act was changed requiring that the original delinquency date, and if they’re changing account information in order to report date that should have been removed that’s something we like to know about because we don’t that to happen, it shouldn’t be there.
(4:04) RAY: Whitney also asks a question about something going wrong. “What recourse do I have if my credit score was checked without my written permission?”
GRIFFIN: And that’s another common misperception about people reviewing your credit report. Again, it’s the report, not the score, that’s being reviewed. And you don’t have to give permission for your credit report to be accessed. A lender if you apply for credit can access your report without your permission. However, if you read the contract in the application you almost always see that by signing here you’re giving permission for us to review your credit report, the most common example are preapproved credit offers. You don’t ask for them to check your report, but they do review through an automated process your credit history to make sure that you meet the criteria for that offer before sending it to you. We don’t show those inquires to anybody, but you so they have no affect on your credit scores, the only time that you’re required by law to give permission is for employment purposes and the employer must have you sign a form, separate form, that says I’m giving you permission to check my report. So you don’t always have to give permission for your report to be accessed, though you usually do if you read the contract itself.
(5:13) RAY: Anne says, “Think this is a layup for you. My friend just stopped paying his credit card and then went away. Will that hurt your credit?”
GRIFFIN: Yes. That’s a slam dunk. That’s the real key to good credit and credit history is just making those payments on time. If you stop making payments, your credit scores and your credit history are going to tank. So, yeah, I’d say yes.
(5:36) RAY: And I hope this isn’t her friend. Jerry asks, “Someone has a bad credit history and a low credit score. How’s the quickest way to improve both, and how long will it take?”
GRIFFIN: Sure, and again, it really depends on how bad your credit history is. If you have strong credit scores and there was recently a study by vantage score, you can find that on the vantage score website related to mortgages and the effect on credit scores and what it showed is that if you started with a really good credit score and you had problems and your debts went negative you could recover quite often as few as nine months but if you already had problems it would take significantly longer so the more severe your credit history issues the longer it will take to recover and there really is no quick fix. People would love to be able to say if you do this, your credit scores will be great tomorrow. But what credit scorers look at and analyze the information on your credit report are really patterns of payment behavior over time. Time is crucial. There is no “today you’re good, tomorrow you’re bad, and the next day, you’re good again.” It takes time and a history and a pattern of on-time payment, and that could be months, it could be years, depending on how serious the problems are.
(6:49) RAY: Ashley has a question about the process whereby Experian and the other bureaus make fixes. For instance, where the father and son have the same name and things get messed up. How quickly can this be resolved?
GRIFFIN: Actually, very quickly today. The, and that’s the most common instance of what we’d call a mixed file. A father and a son. So a Sr. and a Jr. or a 1st and a 2nd or a 2nd and a 3rd. I’m a huge fan of George Foreman, but I always tell people from a credit reporting standpoint it’s a nightmare because all of the sons are George Foreman and not 1st, and 2nd, and 3rd. It’s just George. So, the issue then is how do we identify the individual and if you can contact us and get the credit report which you presumably would have done and would have seen that your son’s or your father’s name is on your report contact us, follow the instructions provided, we may ask for some identifying information, additional information, birth certificate, that sort of thing and as soon as we have that we can resolve that and flag the file. That’s something that we’ve worked very hard at and have gotten better at over the years in making sure that it doesn’t happen again as well.
See related: The 5 basic elements of a FICO credit score, How to improve your credit score, An interactive, step-by-step look at a credit report, 10 things you must know about credit reports, scores, How to dispute credit errors, mistakes, Protect your credit card, score, 8 steps to picking a credit counselor, Get the REAL free credit report, 5 things you should know about business credit scores, 10 ways students can build good credit, How credit card reform will impact you,
Find the terms you must know in our credit card glossary