What many people don't realize is that a credit bureau is simply an information gathering business. The three major credit reporting agencies input the computerized information they receive from lenders and merchants describing consumers' outstanding balance and payment histories. These agencies also search public information records at courthouses through-out the country for information concerning judgments, liens, foreclosures, and bankruptcies. Credit reporting agencies do not assign ratings, nor do they deny credit. It is the lender that decides whether a consumer is creditworthy, based on the information it receives and on its own credit criteria.

Review your credit file every few years to make certain the information it contains is accurate and complete. Most errors occur in files of family members with the same last name and address and in those of people with communityon names. Misspellings and incorrect Social Security numbers add problems as well. Make it a point to check your credit report in advance of applying for a mortgage or other major loan. That way you can correct any errors and avoid delays in the processing of your loan request.

To obtain a copy of your credit report, you can contact one of the three major credit reporting agencies: Trans Union at (216) 779-7200; Experian (formerly TRW) at (800) 682-7654; and Equifax at (800) 685-1111. The new act limits to $8 the amount credit reporting agencies may charge you for a copy of your report. By law, if you contact the credit-reporting agency within 60 days of being denied credit, your credit report is free. Based on the new act, you are also entitled to a free report if you are unemployed and looking for work, are on welfare, or have reason to believe that your credit report contains inaccurate information due to fraud.

If you discover that your credit report contains inaccurate or incomplete information, complete the "request for re-investigation" form you receive with your report or write to the credit reporting agency stating specifically why you believe the information is incorrect. The agency must contact the source of the disputed information. Under the new act, which places more of the burden on the creditor, the creditor must certify that the questioned information is correct. If the information is found to be incorrect or incomplete, the credit reporting agency must delete the information or modify it based on the results of the investigation. At that time, you can request that the credit reporting agency provide a revised copy to any creditor who reviewed your file during the previous six months (two years if the inquiry was employment-related).

If the credit-reporting agency cannot verify the disputed information within 30 days, the information must be deleted from your credit record. Should the creditor subsequently verify the accuracy of the deleted information, the agency is now required to notify you in writing within five days of reinserting the information in your file.

If the dispute cannot be resolved, you have the right to file a brief statement explaining your side of the story. This statement becomes part of your file and is sent to any creditor requesting your credit information. The credit agency may limit such statements to not more than 100 words, if it provides you with assistance in writing a clear summary.

The Consumer Credit Reporting Reform Act also gives consumers the right to sue for damages if the creditor or the credit-reporting agency verifies incorrect information.

If there is negative information in your file, CPAs advise that paying your bills responsibly over a period of two to three years may help convince lenders that your credit problems are behind you.

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