CREDIT FACTS Q & A
- Just what is a "Credit Bureau"?
- What is a Credit Report?
- What is a Credit Score?
- What does all this have to do with me?
- What do you do?
- But are you sure it's even legal to get help with my credit?
- How much improvement can I expect in my credit score?
- Am I guaranteed results?
- How long will it take?
Just what is a "Credit Bureau"?
A "Credit Bureau" is a private company that compiles and stores records on the payment habits and credit history of millions of consumers. They generate profits in the billions of dollars by selling these records when requested by a potential lender.
Credit Bureaus are not government organizations and have no legal authority. But they nevertheless have enormous power and influence over the lives of individual Americans!
In the United States there are three major credit bureaus. They are:
What is a Credit Report?
Gathering information from public records, debt collectors, the court system and mortgage and other lenders, credit bureaus put together information on individual citizens into a file called a "Credit Report."
Your credit report has information on your accounts with mortgage and car lenders, merchant lenders and credit card companies.
It also has public records such as repossessions, court judgments, liens, foreclosures and bankruptcy.
Now when a potential lender is considering a loan application he will contact one (or more) of the credit bureaus and buy a copy of that persons credit report. Based on the information in the credit report and "Credit Score" the lender will decide whether the borrower is a good risk or a poor one.
Based on that decision the potential borrower may be granted or denied a loan. If he is granted a loan, the credit report and score will determine what interest rate he will have to pay.
What is a Credit Score?
Your credit worthiness is reflected in your "Credit Score". This is a 3 digit number assigned to you by each credit Bureau based on your credit report. The higher your score is, the better your credit.
This shows you the range of scores.
Below 585 Very poor
585 - 669 Poor
670 - 699 Fair
700 - 729 Good
Above 730 Excellent
The bureaus use different methods of determining credit scores, and so your credit score will not be the same for each Bureau. But they are likely to be in the "ballpark".
To get your credit score and credit report, click here.
In computing your credit score the credit bureaus consider five basic factors in various degrees, approximately as such;
History of Payments 35%
Have you paid your bills on time?
Have you made payments late?
How late?
What is the frequency of late payments?
Have accounts been turned over for collection?
How many accounts are in collection?
Does your report show repossessions?
Does your credit report show a bankruptcy?
Present Level of Debt 30%
What is the total amount of all your debts?
Length of Credit History 15%
How long have you carried debt? Lenders prefer to see a long history (of accounts paid on time) rather than a shorter one
Types of Credit 10%
There are primarily two classes of accounts, "revolving" and "installment".
Installment accounts (like mortgage and car loans) are where you pay a set amount on a regular schedule.
Revolving accounts (like credit card accounts) are more flexible and are not paid in predetermined amounts, but they often do require a minimum payment.
Lenders prefer to see a mix of both types.
Pursuit of New Credit 10%
Have there been lots of recent "inquiries" (lenders buying your credit report)?
If potential lenders see too many recent inquiries it makes them nervous. It could mean that the consumer is in danger of taking on too much debt.
What does all this have to do with me?
Credit bureaus keep records on millions of Americans, so it's no surprise if a few mistakes creep into credit reports. But unfortunately there are far more than a few. In fact, it's estimated that anywhere from a third to an overwhelming 90% of all credit reports have mistakes.
Let's put it differently - at the very least there's a 1 out of 3 chance that your credit report has errors!
Now when you think about how important your credit score really is, those are NOT very good odds - and that's considering the LOW estimate!
And how many mistakes does it take to negatively impact your credit score?
............ Only one ............
Now you would think that when a matter involves something as important as your credit ... something that is as critical to your personal and financial life ... that the credit bureaus would avoid taking a slovenly attitude toward accurate reporting.
You may be thinking "Well, there ought to be a law ..."
Fortunately there is! The United States Congress passed one to address the problem ... the Fair Credit Reporting Act, or FCRA.
Under the FCRA you have the right to challenge the accuracy of information in your credit report. By law the credit bureaus must investigate consumer disputes within 30 days. If they do not verify the accuracy of the information within those 30 days, they are required under law to delete it.
Although the FCRA gives consumers some protection, it's not perfect.
From the point of view of the credit bureaus the FCRA is a nuisance. There's absolutely no advantage for them. It just means lost time, money and productivity.
So they put roadblocks in the way of the consumer. They know how to utilize a "loophole" in the FCRA, the "frivolous" issue. That is, if a dispute is "frivolous" the credit bureau is not required to investigate. And here's the worst part - initially it's the credit bureaus themselves who get to decide if the dispute is frivolous.
Kind of like putting the fox in charge of the henhouse isn't it?
Needless to say the bureaus will often label a challenge frivolous even though it is not. And although the consumer can always take them to court if they can afford to, most people just don't have the money to hire the high priced lawyers the credit bureaus can ... especially those who are paying appallingly high interest rates because of mistakes on their credit report!
What do you do?
We know all about the "roadblocks" the credit bureaus use to frustrate consumers and obstruct their efforts to get errors removed from their credit report. Utilizing your rights under the Fair Credit Reporting Act we help you challenge the accuracy of data on your report to delete items that could be negatively impacting your credit score.
We know how to deal with the credit bureaus and get results!!
But are you sure it's even legal to get help with my credit?
Although the credit bureaus would like to discourage you from seeking help in challenging the accuracy of your credit report, don't ever let them convince you that you can't do so legally. It definitely is NOT illegal!
Another tactic they like to employ is to reply to your dispute telling you that using help is wasting your money and that credit repair companies are all crooks! And while it's true that some are, the bureau's motive is NOT consumer protection ... it's to protect credit bureau profits by putting obstacles in the way of consumers!
Under the FCRA every citizen has the right to dispute - on his own - information in his credit report. But likewise, everyone also has the right to prepare his own tax return, and yet many people would rather hire a professional accountant due to the difficulty of navigating the complexities of the tax code.
By putting your credit in the hands of professionals, you stand the best chance of raising your credit score ... and getting back the good credit you deserve!
How much improvement can I expect in my credit score?
Results will vary widely, but there will almost always be some major improvement.
And make note!
Regarding your credit, ANY improvement can have a major impact on your personal and financial life ... impact in the form of lower interest rates, the ability to get loans you could not get otherwise, and less stress and emotional upset.
Am I guaranteed results?
Nobody can (if they are the least bit honest) guarantee results in regard to improving your credit score. And no LEGITIMATE company will.
Every person's situation is different. But in most every case there will be major improvement to one's credit report and credit score ... improvement that will enable the client to get a mortgage, car loan or credit card ... and at a far lower rate of interest.
Don't forget - depending on your situation even ONE mistake on your credit report could mean a difference in your credit score - and in whether you can buy a home or not.
How long will it take?
It will depend on your own personal situation. It took many years to form your current credit history, and it's just not realistic to expect exemplary credit overnight.
Nevertheless, there are cases where it takes barely over a month to see some very major improvement. Other times it takes longer. Very rarely it can take a year or more.
But on average you can expect major improvement in your credit in 4 - 8 months time. |
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