While there are around 52 million credit reports active at any given time, a majority of consumers haven’t ever actually looked at their own files. Due to a 2003 amendment to the Fair Credit Reporting Act, all consumers are entitled to one copy of their report from each of the three consumer reporting agencies every calendar year.
This report contains a staggering amount of crucial and personal data, including all recorded addresses that the individual has used, any aliases and all of their current and past consumer debt, plus much more. It is important to remain calm if a different spelling of the consumer’s name appears or even if an inaccurate social security number appears along with the correct number. These variations in data are because someone has entered things incorrectly, and unfortunately, data might be linked to them. Changing some variations can cause massive changes in the overall report.
Where you do want to pay close attention is in the actual credit history section. Often this is an area divided into “trade lines,” but which are the individual accounts for which the consumer is considered responsible.
Each trade line will include the name of the creditor and the account’s identifying number (though this can often be scrambled or missing digits to ensure security). A single creditor may have identified more than a single trade line if the consumer has moved. It can often be hard to trace back the trade line to the address to which it is connected, but again, variations in data will always occur and should only be amended or corrected if any fraud has occurred around them.
For example, if a consumer finds that a totally inaccurate address appears on their credit report and that one or more trade lines have been altered to match this faulty address, they may have been the victim of identity theft. This, naturally, is something to be followed up on immediately. The consumer must contact the company which holds the account and also notify all three credit agencies of the issue, in writing, immediately.
Generally any credit report is going to also generate something known as the credit score. Lending agencies, banks, credit card companies and several other organizations are interested in the report and score because it helps them to determine if a consumer is a financial risk. The scores are usually based on a 1,000 range, with the majority of “good” scores coming in at around 700 or higher. When a consumer’s score dips below that number they are considered risky.
Here too is where trade lines can come in very handy. Let’s say a consumer wants to get a car loan, but their credit score is in the high 500s. They can get the loan, but the interest and terms will be brutal. If they can get a family member or friend to add them as an authorized user to a credit account in long-term good standing, that trade line will then positively affect their credit score. There has been a lot of news about trade lines being used in this way to help friends and family access credit, but this should be done only after considering the effects on all credit scores involved.