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It is probably not a news alert to you that there are three major credit bureaus in the US, all of which maintain a credit score about you. Your credit score supposedly gives an accurate reflection of your ability and organizational skills to repay loans on time. It does not matter if that loan is a mortgage, a car payment, a gas company credit card, a department store credit card, a Visa or MasterCard or Discover or American Express, they all get lumped together. Your credit score not only reflects the debts you currently have outstanding, but also debts you have had in the past and your payment history with that lender, even if that account has been closed for years. So what happens is that a single number, usually between 450 and 850, is assigned to you and supposedly reflects your credit-worthiness in the eyes of that credit bureau. Why do I keep saying supposedly? Because the actual value of that number that reflects your credit score is worthless. Let me explain. First of all, each credit reports to at least one, and sometimes two of the major credit bureaus. Then contracts change, personnel changes, and then they start to report to a different credit bureau. Any errors that were reported to the first credit agency are still there and are no longer being updated, so the error stays there, while the lender is now reporting to the second credit agency. The exception to this rule, which is not even universal, is that mortgage companies usually report to all three credit bureaus, simply because of the size of the loan. Next, think of the volume of data that the credit bureaus need to maintain. They have a record for each account that you currently have and have ever had, along with details of your payment history with them. That right there is not much, but now multiply that by the total number of businesses and consumers in the entire country, and you can begin to see the large volume of data they need to maintain, which numbers in the BILLIONS of records. If even 0.1% (less than 1%) of these records are in error, that still means there are hundreds of thousands of errors. And for the record, current studies indicate the number of errors is greater than 10%, which is tens of millions! So there are the facts. No one credit bureau has a completely clear picture of any person’s credit history, because lenders report to a variety of lenders. The credit bureaus do not share records. Studies indicate that the credit bureau’s data probably contains errors anyway. So is your credit history reflected by the number that any one credit bureau returns as an indicator of your credit worthiness? Absolutely not! How can it be? But what it is is what it is and we need to work with it. So what you can do to keep your credit history as clean as possible is to make sure that there are no errors reported. That means that you need to get a copy of your credit report, and get a separate copy from each of the three credit bureaus, which are Equifax, Experian, and TransUnion. Then go over the data shown there and dispute anything that reflects poorly on you. In other words, anything at all! Do this with each credit bureau. Some studies have shown that instead of disputing five items in one letter, it is more effective to dispute one item per letter. Do this with EACH credit bureau. Once they receive your dispute letter, they then have 30 days to either prove the information is accurate, or they are obligated by federal law to remove it. You should do this at least annually, and more likely, at least twice per year. Your credit rating and credit score are very valuable to you, and to have it reflect something that is less than what you deserve makes no sense at all. Jon is a computer engineer who maintain a variety of web sites based on his knowledge and experience. For more information about your credit score and how to raise it, please visit his web site at Improve Your Credit Score Easily.
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