credit

Do lenders have to report to credit bureaus?

Janna HerronDear Credit Card Adviser,
I recently realized I only have one credit report -- with Equifax. My only source of credit is a Visa credit card through my credit union that I've had for seven years. When I signed for the card, it was for the sole purpose of establishing credit. But when I applied for a mortgage this year, I found out that the credit union only reports to one credit bureau.

If we as consumers are subject to these credit reports, shouldn't the banks, credit unions and other lenders that issue these cards have to report to all three credit bureaus? Thank you.
-- Clara

Dear Clara,
Unfortunately, lenders don't have to report to all three credit reporting agencies -- or any at all, for that matter.

The Fair Credit Reporting Act dictates how information can be used and supplied to credit reporting agencies, but it doesn't stipulate that lenders must report information. In general, most major banks report to all three credit bureaus. But smaller regional banks and credit unions may only report to one or two credit bureaus. There are some lenders and others that don't report at all.

You could request your credit union to report to all three credit bureaus, but that may not do the trick. Lenders must have an account set up with a credit bureau for the bureau to take the information, which costs money.

So where does that leave you?

Fortunately, you still can buy a house. Two mortgage professionals I spoke with said they can put you in a home loan that is backed by the Federal Housing Administration, using nontraditional credit data such as payment history from rent, utilities, cable or cellphones. The key is to have three of these accounts that have been open at least 12 months.

"Nontraditional is a tougher way to go only because it requires a lot of work on the borrower's part," says Pava Leyrer, president of Heritage National Mortgage in the Grand Rapids, Mich., area.

Other conditions may apply as well, such as income minimums, no collections accounts and possibly two months' worth of mortgage payment reserves, Leyrer says. It's important to work with a mortgage professional who is familiar with these types of mortgages, so shop around.

Unless you can pay with all cash, you will need to postpone your house-buying plans and increase your credit history. The fastest way to bulk up your credit history is to become an authorized user on a family member's or close friend's existing credit card that has a good payment history. Double-check that the card issuer reports these accounts to all three bureaus. As soon as you become an authorized user, the entire payment history of that card populates your credit reports.

You also can open another credit card or take out a small loan at a national bank that reports to all three bureaus. But it will take six months before FICO will consider the new account in its credit score.

Find the best credit cards for excellent credit at Bankrate.com.

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To ask a question of the Credit Card Adviser, go to the "Ask the Experts" page and select "Credit Cards." Read more columns by the Credit Card Adviser. Follow Janna Herron on Twitter.

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.

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