Your credit report is an account of your personal financial history. It includes a record of all the loans and credit accounts you've had for the last seven years, including every late payment and any legal judgments or outstanding accounts. Whenever you apply for a loan or credit card, and often when you apply for an apartment or job, someone will check your credit to see if you have a history of paying your bills on time. It's important to check your credit report regularly for accuracy. It's also one of the best things you can do to prevent identity theft, because any fraudulent charges or accounts will appear on your report.
The agencies that keep credit reports, called credit bureaus, evaluate your overall creditworthiness with one number, often referred to as a credit score. A good credit record can impress a potential employer or lender. A bad credit record can make you look irresponsible and untrustworthy and can prevent you from getting a security clearance.
Credit report information
Your report includes basic information including your name, date of birth, Social Security number, current and previous addresses, and employment information. But the most important information is the report's record of all the loans and credit accounts you've had for the past seven years, including late payments. Any credit card with your name on it reflects on your credit score. Even if a spouse runs up the credit cards, the active duty service member is responsible. Debt incurred by either party in a marriage belongs to both parties. If you have concerns about your spouse affecting your credit, you should speak with an attorney. Contact the Legal Assistance Office on your installation for more information.
Bankruptcy is included as part of your credit record for ten years, as are other legal judgments against you. When you apply for a job that pays more than $75,000 annually or for a loan or life insurance policy of more than $150,000, there's no time restriction on your record; the employer, lender or insurer can get a report on your credit history for your entire life. So a bad credit record can keep you from getting a loan, an apartment or a job for a long time.
Ordering a credit report
Thanks to the Fair and Accurate Credit Transactions Act, every American is entitled to a free credit report once a year from each of the three main credit reporting bureaus: Equifax, Experian, and TransUnion. To order your credit report online, go to AnnualCreditReport.com. This centralized website sponsored by the three main credit bureaus lets you order all three reports and view them instantly online. To order your report over the phone, call 877-322-8228. Your credit report will be mailed to you within 15 days.
For security reasons, AnnualCreditReport.com does not work overseas. If you're stationed outside the United States or deployed overseas, you can order your report by mail by printing this form: Annual Credit Report Request Form.
When you get your reports, look them over carefully. If there's anything you don't understand, contact the credit bureau for an explanation. The reports include a lot of information and you may need some help interpreting them the first time you see them. Federal law requires that Equifax, Experian, and TransUnion make this help available to you.
How to correct a mistake in your credit record
If you find a mistake in any of the reports, you have the right to dispute it and try to have it corrected. Ask the credit bureau for a dispute form, fill one out online through the credit bureau's website or send a letter with the correction you are suggesting. Attach copies (not original documents) of any supporting documentation. Clearly identify each item in the report that you think is mistaken and explain why you think it is wrong. Keep copies of your letters and backup documentation in case the correction isn't resolved smoothly. The bureau will respond in writing in about four weeks. It's the credit bureau's responsibility to prove that the information is correct, not your responsibility to prove that it is wrong.
If the bureau investigates and finds that a mistake has been made on your record, the bureau will correct it. You can then ask the bureau to send a corrected version to anyone who has received your report within the past six months, or within the past two years to any employer who requested a copy of your report as part of a job application process. You can also ask the bureau to identify the source of the mistaken information, and you should send a letter explaining the mistake to that source, too.
If there is a dispute over an error or if you think that someone has stolen your identity and is using your credit, be prepared for a long period of back-and-forth communication with the credit bureau and your creditors. While the burden of proof lies with the bureau (if it can't prove that the information in question is correct, then it has to delete it) the process of resolving a dispute or unraveling a case of identity theft can be complex and lengthy. If you get involved in this situation, be sure to keep detailed records of letters and conversations, and be assertive about following up with everyone you contact.
Credit reports and your military service
Besides causing financial troubles for the service member, poor financial management can impact individual and unit readiness through loss of working hours, loss of pay, loss of security clearances due to those financial hardships and poor performance on the job. Because your work can be dramatically affected by financial problems, DoD is committed to helping service members with credit issues.
Each Service has a Personal Financial Management program that can help with the following actions:
- Provide information about illegal interest rates. Part 232 of Title 32, Code of Federal Regulations, prohibits creditors from making payday loans, vehicle title loans and tax refund anticipation loans to service members and their families at annual percentage interest rates of more than thirty-six percent. Any credit agreement subject to this regulation that fails to comply with this regulation is void from inception.
- Help service members avoid credit repair services. Don't take the bait. Credit repair services push a seemingly magical solution, but what they actually do is take your money, hundreds or even thousands of dollars that you desperately need to work your way out of debt, and then fail to deliver on their promises. By the time you realize you've been taken, your money will be gone. And in many cases, so will the credit repair service. Many of these services engage in illegal practices and come and go under different names until they are finally caught and shut down.
- Help service members avoid very high interest loans for car purchases. PFM counselors can help service members learn about predatory loans and direct them to a military lending institution that offers a lower rate.
- Learn more about bankruptcy. Service members need to be aware of the long-term consequences of filing for bankruptcy, such as difficulty in qualifying for mortgages or other loans. PFM counselors report that in most cases, a viable financial plan can be developed in lieu of a service member filing for bankruptcy.
If your credit is in bad shape, and you're looking to rebuild it, be sure to check out this podcast: Repairing Your Credit. For more information about protection from credit discrimination as a service member, visit Consumer Financial Protection Bureau.