Having a high Credit Score can make a difference of up to 18% in
loan repayment costs. For example, on a 30-year, $150,000 fixed
rate mortgage, a borrower with the best credit score, 760-850,
will pay 5.59%, or $860 per month, while someone in the worst
score range will pay 7.18%, or $1,016 per month.
This can make a big difference to the household budget, so it's
to your advantage to keep your credit score as low as possible.
The 3 major credit bureaus, Experian, Equifax and Trans Union
are similar and feature a "Credit Score", which is derived from
credit report information submitted to them about you.
Under the Equal Credit Opportunity Act, a credit scoring system
may not use characteristics such as race, sex, marital status,
national origin or religion as factors, though they are allowed
to use age.
Credit scores are determined by your bill-paying history, the
number and type of accounts you have, late payments, collection
actions, and outstanding debt.
The total number of points reflects how likely you are,
statistically-speaking, to pay back a loan. If you are denied
credit, the Equal Credit Opportunity Act forces the creditor to
tell you the specific reasons your loan application was denied
if you ask within 60 days.
Acceptable reasons include high balances on charge cards, or bad
employment history. Unacceptable reasons include vague excuses
such as "You didn't meet our minimum standards".
Sometimes you can be denied credit because of information on a
credit report. The Fair Credit Reporting Act requires the
creditor to give you the contact information of the credit
report agency supplying the information.
The credit reporting agency can give you the information on your
report, but only the lender can tell you why this led to your
application being refused.
However your credit report may include inaccurate or incomplete
information (credit records). Identity theft is a growing
problem, and can take up to a year to resolve. Nearly 10 million
people fall victim to identity theft each year, costing
consumers $5 billion and businesses $48 billion, according to
the Federal Trade Commission.
In this situation you have to send letters to every one of the
credit bureaus. Also learn your credit rights by familiarizing
yourself with the Fair Credit Reporting Act (FRCA).
The FCRA gives you the right to dispute inaccuracies and
omissions, and it requires credit bureaus to investigate your
complaint (generally in thirty days), send you a prompt response
and correct any errors.
The law as well requires the source of inaccurate information
(such as a bank) to correct the record at the credit bureaus to
which it initially provided the erroneous information.
Consumers working on their credit reports say many times their
letters are ignored by credit bureaus. Consumers say even with
proof a credit record isn't theirs, its removal from their
credit report can take 3 or even 4 challenge letters, because
the credit bureaus will have only corrected the facts in their
own files and will not have updated the credit report.
Send your dispute letter by REGISTED MAIL. Credit companies will
respond faster if they know you can prove you filed a complaint
on a certain date.
Keep a record of when you sent the dispute letters and what date
you should expect a response. If you have received no defense to
your claim after thirty to thirty seven days, send another
registered letter requesting an updated credit report and
demanding the disputed credit record be deleted.
If the bureaus don't reply in the thirty days, it must be that
the information they had on file was either inaccurate or
unverifiable. In either case, based on data from the Fair Credit
Reporting Act, the credit record must be immediately deleted
from your credit report.
A few consumers have eliminated negative marks on credit reports
just by going through this process of disputing credit records
many times.
Since some creditors will not take the time to respond, you can
sometimes win by default. Usually a bit of progress will be made
with each challenge.Remember, the credit bureau would like you
to quit bothering them because if you are not disputing the
credit report,they can legally carry on selling it as profitable
information.
To obtain your credit score, correct your credit rating, or even
avoid becoming a Victim of Identity Theft.
About the author:
About your Credit
Score by Frank Vanderlugt
