Who sees your credit report?

Are your credit reports available to anyone who asks? Certainly they are not. Under section 604 of the Fair Credit Reporting Act (FCRA), access to your credit reports is limited to specific situations, which are referred to as "permissible purposes." They are:

• In response to a court order
• For the purposes of disclosure to the consumer
• As part of a legitimate business transaction which includes extending credit, reviewing the credit report of an existing customer, and collecting a debt
• For employment screening purposes
• As part of the insurance underwriting process
• In connection with screening requirements of a consumer’s eligibility for a license granted by the government
• In response to a request by state or local child support enforcement authorities to determine an individual’s capacity to pay child support
• To determine the risk and valuation of loans for the purposes of investing or servicing

Who decides what goes in your credit reports?

Many people are surprised to discover that the information on your credit reports doesn't actually originate with the credit bureaus at all. In reality, the credit bureaus function more like warehouses: they store data, which is reported to them from a variety of sources including your mortgage and auto lenders, credit card issuers, student loan companies, public record vendors, retail stores and finance companies. Each of these “reporters” has either extended credit to you or has been hired by the credit bureaus to collect and report any derogatory public record information that is in your name. Consumers even have the ability to update their own credit reports by furnishing change of employment or address information.

It's important to realize that having negative information on your credit reports doesn't mean you're doomed forever. Despite late payments — or even bankruptcy — you can still make credit your friend.

In general, account information, including late payments and other adverse information, is kept on your credit reports for no longer than seven years. However, there are certain exceptions to this rule:

What is a credit score and how is it calculated?