Did you accidentally bounce a check? Your bank and the cashier in the checkout line know about that, too.
BYLINE: Denise Trowbridge, The Columbus Dispatch, Ohio
SECTION: BUSINESS AND FINANCIAL NEWS
Sep. 17--If you apply for a credit card or refinance your mortgage, you probably know the bank is going to check your credit report. You might even know that the higher your credit score, the lower your interest rate.
But did you know that companies have access to more information about you than just your three-digit credit rating?
Shopping around for auto or homeowners insurance? The company checked into your insurance score and your Comprehensive Loss Underwriting Exchange report, known as CLUE. Shopping for private health insurance? They're looking into your medical information.
Did you accidentally bounce a check? Your bank and the cashier in the checkout line know about that, too.
Companies use this information when they do business with you. The scores are important, as they can affect everything from the amount you pay for car insurance to whether a bank will let you open an account.
But there is good news: You can get that information, too. Thanks to the Fair Credit Reporting Act, you can get copies of these reports, improve your scores and correct errors, which could save you money.
First, you need to know how you look to the companies you do business with, and how they use that information.
THE FICO SCORE
-- What it is: This is your credit score, a history of all of the debt accounts you have had -- credit cards, student loans, mortgages, car loans, etc. The file contains information on your credit limits, current balances and number of late payments you've made. If you have accounts in collections, filed for bankruptcy or have foreclosures or liens against you, that data will appear there, too. Negative information is kept for seven years. FICO scores range from 300 to 850. The median score is 723. The higher your score, the better: 720 or above means you're likely to be approved for a loan and receive the best interest rates. Anything below 600 will qualify you only for subprime lending.
-- How it's used: Banks, creditcard and finance companies use scores to set interest rates and determine loan eligibility. These scores also play a factor in your insurance rate. Employers increasingly look at reports before hiring. Three bureaus -- Equi-Fax, Experian and TransUnion -- provide credit scores to companies.
-- Get a copy: You can get a free copy of your credit report each year from www.annualcreditreport.com or by calling 1-877-322-8228. This is for the report only; it does not include your FICO score. For a fee, you can receive all three credit bureau reports with scores from www.myfico.com. Or, you can contact each bureau individually, at www.experian.com, www.equifax.com and www.transunion-.com. This costs $10 to $15 each.
-- Correct/improve score: You can address errors with these bureaus online or via the mail. You can't remove negative items that are accurate, but you may add a 100-word note explaining your side of the story.
The most common contributors to low scores? Late payments and high balances on credit cards. Paying bills on time will raise your score. Late payments account for 35 percent of your score. Paying down credit cards can raise your score significantly. Your debt-to-credit ratio accounts for 30 percent of your score. Paying down installment loans such as mortgages, student loans and car loans won't significantly improve your score.
CREDIT - BASED INSURANCE SCORES
-- What it is: Insurers use these to determine how likely you are to file an auto or homeowners insurance claim in the next 12 months. Auto-insurance scores are a combination of your carinsurance claims history and credit score. Homeowners insurance scores are a combination of your past homeowners-insurance claims and credit score. Previous insurance claims and credit-report data such as bankruptcies and liens, and the ratio of debt-to-credit limit on your credit cards, heavily impact the score.
-- How it's used: Insurers use this, in conjunction with your CLUE report, to set rates when you apply for a policy. For car insurance, your driving record counts, too.
-- Get a copy: www.choicetrust.com. This costs $12.95 each and includes access to your Equifax credit report for 30 days. If you are denied insurance because of your score, the insurer might tell how to get a free copy of your report.
-- Correct/improve score: Avoid small or unnecessary insurance claims. If you find an error on your report, you have to write to the appropriate department noted at www.choicetrust.com.
CLUE REPORTS
-- What they are: A history of the claims you have filed with insurers over the past five years. You might have two reports, homeowners and auto. Auto CLUEs contain the date the claim occurred, type of claim (injury, collision, liability, property damage, etc.) and cost to the insurer. It includes all insured losses, including car theft and towing. It doesn't include AAA or auto-club claims. Homeowners CLUEs contain the date claims occurred, claim type (wind, fire, water, catastrophe or burglary) and how much the insurer paid. Homeowners CLUEs can be used in two ways. When buying a house, you may ask the seller to obtain a copy of the homes report, so you can see the homes insurance-claims history. If you are shopping for insurance, companies will pull your personal CLUE report, which is your history of your own insurance claims.
-- Get a copy: www.choicetrust.com; or 1-866-527-2600
-- Correct your report: If you find an error on your report, you write to C.L.U.E. Inc. Consumer Disclosure Center, Box 105295, Atlanta, Ga. 30348
CHEXSYSTEMS REPORT
Your banking history, with check-printing records, dates and amounts of any bounced checks, open and closing dates of past bank accounts, and inquiries from other banks where you have tried to open accounts. The report contains your driver's license information to help banks verify your ID when opening accounts.
-- How it's used: Used only by banks and credit unions to determine if they want to open accounts with you, and to verify your identity.
-- Get a copy: free, from www.consumerdebit.com or 1-800-428-9623. Dispute errors in writing.
-- Improve your report: Keep account inquiries to a minimum; don't try to open a lot of accounts at different banks in a short period of time. Inquiries might suggest to them that you're an unstable customer. Avoid bouncing checks. If you are denied an account because of your report and you don't have a questionable banking history, you could be a victim of identity theft. Check your report for suspicious activity.
SCAN REPORT
-- What it is: A database of bounced checks used by retailers. If you've written a check that was returned for insufficient funds, that data will show up with the date, amount of the check and how long it took you to deposit money to cover it. Information is reported for that past three years.
-- How it's used: A retailer will use this information to decide whether it wants to accept your check. National retailers may augment the information with more of their own. If your check is denied, see if you've been a victim of identity theft.
-- Get a copy: free, from www.consumerdebit.com; or 1-800-262-7771. Errors can be disputed in writing.
QUALIFILE SCORE
-- What it is: Used to predict how likely you are to have a charged-off bank account in the next 12 months. The score is a combination of information contained in your SCAN, Chex-System and one or more creditbureau reports.
-- How it's used: Banks and credit unions use it to decide if they will open an account for you. It also can be used to determine the creditworthiness of those with limited credit histories.
-- Get a copy: You can't get a copy of this score.
-- Improve your score: It's based on your SCAN and Check-Systems information, so you can improve it by not bouncing checks, or paying bounced checks quickly. Don't apply for accounts at different banks in a short period of time. Your FICO score also is part of the score, so concentrate on improving your overall credit rating. If you have a bad checking account history, you can complete a GetChecking course, at www.getchecking.org, to be eligible for a fresh start with a bank.
MEDICAL INFORMATION BUREAU REPORT
-- What it is: An overview of your medical history for the past seven years. It contains codes identifying 230 broad categories related to medical conditions you have been treated for in that span. Nonmedical items, including negative marks on your driving record, participation in hazardous sports or occupational activities might appear. Only 20 percent of consumers have such a file. Those who have applied for private (non-employer sponsored) life, disability, health or long-term care insurance have one.
-- How it's used: Insurers use this report to determine your insurability, identify potential pre-existing conditions and detect potential fraud in insurance applications.
-- Get a copy: Call 1-866-692-6901, or go to www.mib.com. Errors have to be corrected in writing.
Information came from ChoicePoint, eFunds Corp., Fair Isaac Corp. and the Medical Information Bureau. •