Foreclosure is the equitable proceeding in which a bank or other secured creditor sells or repossesses a parcel of real property due to the owner's failure to comply with an agreement between the lender and borrower called a "mortgage" or "deed of trust." Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property.
Building a Better Credit Report
If you've ever applied for a credit card, a personal loan, or insurance, there's a file about you. This file is known as your credit report. It is chock full of information on where you live, how you pay your bills, and whether you've been sued, arrested, or filed for bankruptcy. Consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses with a legitimate need for it. They use the information to evaluate your applications for credit, insurance, employment, or a lease.
Having a good credit report means it will be easier for you to get loans and lower interest rates. Lower interest rates usually translate into smaller monthly payments.
Nevertheless, newspapers, radio, TV, and the Internet are filled with ads for companies and services that promise to erase accurate negative information in your credit report in exchange for a fee. The scam artists who run these ads not only don't deliver they can't deliver. Only time, a deliberate effort, and a plan to repay your bills will improve your credit as it's detailed in your credit report.
Federal Trade Commission (FTC), the nation's consumer protection agency, has written
this booklet to help explain how to build a better credit report.
The Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness, and privacy of information in the files of the nation's consumer reporting companies. The FTC enforces the FCRA with respect to consumer reporting companies. Recent amendments to the FCRA expand consumer rights and place additional requirements on consumer reporting companies. Businesses that provide information about consumers to consumer reporting companies and businesses that use credit reports also have new responsibilities under the law.
Here are some questions consumers have asked the FTC about consumer reports and consumer reporting companies, and the answers.
Do I have a right to know what's in my report?
What type of information do consumer reporting companies collect and sell?
Identification and employment information: Your name, birth date, Social Security number, employer, and spouse's name are noted routinely. The consumer reporting company also may provide information about your employment history, home ownership, income, and previous address, if a creditor asks.
history: Your accounts with different creditors are listed, showing how much credit
has been extended and whether you've paid on time. Related events, such as the
referral of an overdue account to a collection agency, also may be noted.
Inquiries: Consumer reporting companies must maintain a record of all creditors who have asked for your credit history within the past year, and a record of individuals or businesses that have asked for your credit history for employment purposes for the past two years.
Public record information: Events that are a matter of public record, such as bankruptcies, foreclosures, or tax liens, may appear in your report.
Is there a charge for my report?
These consumer reporting companies are phasing in free reports geographically through September 1, 2005. After that, free reports will be accessible to all Americans, regardless of where they live.
Free reports have been available to consumers in the Western states Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming since December 1, 2004.
Consumers in the Midwestern states Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin have been able to order free reports since March 1, 2005.
Consumers in the Southern states Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, and Texas can begin ordering their free reports June 1, 2005.
in the Eastern states Connecticut, Delaware, Maine, Maryland, Massachusetts,
New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island,
Vermont, Virginia, and West Virginia the District of Columbia, Puerto Rico,
and all U.S. territories can begin ordering their free reports September 1, 2005.
How do I order my free report?
Q: What information
do I have to provide to get my free report?
Still, www.annualcreditreport.com is the only authorized online source for your free annual credit report from the three nationwide consumer reporting companies. Neither the website nor the companies will call you first to ask for personal information or send you an email asking for personal information. If you get a phone call or an email or see a pop-up ad claiming it's from www.annualcreditreport.com (or any of the three nationwide consumer reporting companies), it's probably a scam. Don't reply or click on any link in the message. Instead, forward any email that claims to be from www.annualcreditreport.com (or any of the three consumer reporting companies) to firstname.lastname@example.org, the FTC's database of deceptive spam.
Are there other situations where I might be eligible for a free report?
To buy a copy of your report, contact:
Under state law, consumers in Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey, and Vermont already have free access to their credit reports.
For more information, see Your Access to Free Credit Reports at ftc.gov/credit.
Q. What is a credit
score, and how does it affect my ability to get credit?
Information about you and your credit experiences, like your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report. Using a statistical formula, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor. A total number of points a credit score helps predict how creditworthy you are, that is, how likely it is that you will repay a loan and make the payments on time. Generally, consumers with good credit risks have higher credit scores.
You can get your credit score from the three nationwide consumer reporting companies, but you will have to pay a fee for it. Many other companies also offer credit scores for sale alone or as part of a package of products.
For more information, see Credit Scoring at ftc.gov/credit.
Improving Your Credit Report
Under the FCRA, both the consumer reporting company and the information provider (the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under the FCRA, contact the consumer reporting company and the information provider if you see inaccurate or incomplete information.
1. Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report that you dispute, state the facts and explain why you dispute the information, and request that the information be deleted or corrected. You may want to enclose a copy of your report with the items in question circled. Your letter may look something like the one on page 8. Send your letter by certified mail, return receipt requested, so you can document what the consumer reporting company received. Keep copies of your dispute letter and enclosures.
Consumer reporting companies must investigate the items in question usually within 30 days unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.
When the investigation is complete, the consumer reporting company must give you the written results and a free copy of your report if the dispute results in a change. (This free report does not count as your annual free report under the FACT Act.) If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that the information is, indeed, accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider.
If you request, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. A corrected copy of your report can be sent to anyone who received a copy during the past two years for employment purposes.
If an investigation doesn't resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. Expect to pay a fee for this service.
Tell the creditor or other information provider, in writing, that you dispute
an item. Be sure to include copies (NOT originals) of documents that support your
position. Many providers specify an address for disputes. If the provider reports
the item to a consumer reporting company, it must include a notice of your dispute.
And if you are correct - that is, if the information is found to be inaccurate
- the information provider may not report it again.