JANE BRYANT QUINN
Here's a new and important reason to check your credit history: Some of your lenders may not be reporting the full status of your account.
That's most apt to happen to the bank's best customers. They include on-time payers who habitually carry revolving debt. Or people close to their credit limits who could handle more. Or borrowers who were slow to pay in the past but now are covering bills on time.
In the normal course of events, a competing lender would offer you a cheaper credit card or home-equity loan, or a card with higher credit limits.
But your current lender can stop that from happening by not reporting your account, or not reporting it in full. That hides you from the competition. You become an unwitting credit captive. It's unfair and deceptive but entirely legal.
Credit reporting is voluntary for lending institutions. They do it because it's in their self-interest to see your total credit picture, including the loans you're carrying from other lenders. The more they know, the better they can manage their lending risk.
Credit reporting benefits consumers, too. Thanks to the amount of information lenders have, Americans enjoy superior access to mortgages, auto loans, credit cards and all other forms of credit.
Your credit history is held by one or more of the three, major credit bureaus: Equifax, Experian and Trans Union. Traditionally, lenders disclose how much credit they give you, your payment habits and how much you buy.
This information is collected into a credit score. That's a single number, summarizing what kind of lending risk you are.
When you apply for new credit a credit card, department-store charge, mortgage or auto loan the lender checks your credit score. If it's above a certain level, you'll get the money.
Different lenders set different cutoff points. The interest rates and credit limits they establish reflect their assessment of the risk you pose.
Lenders also buy lists of names from credit bureaus, sorted by the credit characteristics they seek. If you make the list, you'll get a letter or phone call, offering you a better deal.
Sophisticated lenders can tell from the credit lines, usage and payback rates how profitable a particular account might be. Those are the accounts they try to steal away.
The lenders that may not report credit data fall into two groups, says David Gibbons, deputy comptroller for credit risk at the Office of the Comptroller of the Currency, which regulates some 2,400 national banks:
? Major credit-card lenders. They're trying to keep their best accounts from being pirated.
Banks can't be compelled to ship information to credit bureaus. But since April, the OCC has encouraged full reporting as part of its regular bank examinations.
The industry doesn't want to discuss this issue. But it has formed a committee to consider voluntary reporting standards. Some banks want to cut back on credit reporting and others don't, says Pete Hisey, editor of Credit Card News in Chicago.
Gibbons says that some institutions have started to report again, "pending a permanent solution."
? Sub-prime lenders. They grant mortgages, auto loans and credit cards to people with poorer credit histories.
Sub-prime borrowers pay higher rates for smaller loans and credit lines. These borrowers hope to rehabilitate their credit, and qualify for lower rates, by proving that they can pay on time.
When sub-prime lenders don't report your history to credit bureaus, they're depriving you of the chance to pull yourself out of the hole. Gibbons has less hope that sub-prime lenders will report voluntarily. The problem, he says, lies chiefly with certain consumer-finance and mortgage companies that aren't regulated by the OCC. They're happy to charge you higher rates, as long as they can.
For copies of your credit report, call Equifax at (800) 685-1111; Experian at (888) 397-3742; or Trans Union (800) 916-8800 for voice or (800) 888-4213 for automated response. There may be a fee (up to $8).
If you see that your lender isn't reporting or doesn't reveal all the data that other lenders do, write a letter to the president of the institution. Say you're being treated unfairly and will drop your loan or credit card unless you're offered a better rate.
Then assemble your payment data and apply for a new loan or card, in person, through a local lender. Sub-prime borrowers, in particular, should be able to find a better deal, if they can show that they pay on time.
Dumping mortgage insurance
Many homeowners are going to save some money, thanks to the new rules on private mortgage insurance that just took effect.
It's easier to cancel coverage you don't need. For some people, whose coverage has long outlasted its usefulness, premiums will be canceled automatically.
You're getting help from two sides. First, there's the new Homeowners Protection Act. Second, the law has triggered some useful policy changes by Fannie Mae and Freddie Mac, the agencies that, together, fund some 40 percent of all private home mortgages.
You need mortgage insurance when you're buying a house and are short of cash. Normally, lenders require a down payment of 20 percent. But with mortgage insurance, you can buy for as little as 3 percent down. The insurance guarantees that the lender will be paid, if you default.
Say you had 5 percent cash and borrowed $100,000. At the Mortgage Guaranty Insurance Corp., you'd pay $63 a month for the first 10 years and $17 a month thereafter, for its most widely used plan.
You no longer need your mortgage insurance after the equity in your home exceeds 20 percent. (Your equity is the value of the house minus the mortgages against it.) But many borrowers never thought about canceling it. If they tried, some lenders refused.
They can't do that anymore. Here's the current lay of the land:
? If you get a new mortgage on or after July 29, 1999: All borrowers with private mortgage insurance will be informed of their cancellation rights and how to exercise them. You'll get a new notice once a year.
When your mortgage balance drops to 80 percent of the home's original value, you can ask that the policy be canceled. The lender has to agree if you ask in writing, are current on your payments, have no other loans against the house, and show that the value of the house has not gone down.
? If you got a mortgage prior to July 29, 1999, and carry private mortgage insurance: You have to be informed of your cancellation rights once a year. The law provides no right of automatic cancellation. But Fannie Mae and Freddie Mac have written new rules for the people whose mortgages they buy.
? No matter when you got the mortgage: If you have at least 20 percent equity in your home, based on its current market value, you can ask your lender to cancel your mortgage insurance. The lender has to tell you what's required. You may need an appraisal, costing perhaps $200 to $500.
Syndicated columnist Jane Bryant Quinn can be reached in care of the Washington Post Writers Group, 1150 15th St., Washington, D.C. 20071-9200.
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