A consumer's credit history and their resulting credit score, as computed by the credit bureaus, has a major impact on many aspects of the consumer's life, and that is getting to be more the case every day. These days, many employers are doing credit checks on potential employees, and if they have three candidates that are pretty much equally qualified in all other areas, the one with the highest credit score will likely be offered the job. |
Even car insurance companies are getting into the act, where many of them, even the major ones, are starting to factor in the consumer's credit score when they quote car insurance rates. Their theory, which they claim is backed up by mountains of evidence, is that an individual with a low credit score is historically more likely to file claims, even frivolous claims, that an individual with a higher credit score. While consumer advocacy groups are crying foul at this practice, it is very difficult to argue with hard and cold statistical evidence and facts.
So with all that said, why are more individuals not more conscious of their credit scores, and more importantly, how to raise their credit scores? The only answer available is that the majority of consumers are not aware of these practices, and do not know where to start to improve their credit score.
The very first thing you need is copies of your credit reports. Consumers can get this for free in most states once a year, and can also get a free copy if they were recently denied credit. Note that you need a separate copy of your credit report from each of the three major credit reporting agencies, which are Experian, TransUnion, and Equifax. Each of these companies keeps a separate credit profile on each consumer and business.
An interesting thing to note, which is to your advantage, is that these companies do not communicate with each other or share information. Your Visa lender may report to one of them, your mortgage company may report to another, and your bank may report to yet a different one for your car loan. The end result is that NONE of them have a complete and true picture of you and your credit usage or history.
As a result of this, your credit report almost certainly contains errors, and those errors only serve to lower your credit score. If you look over your credit reports closely, you may find accounts that do not belong to you, which is not unusual for people with common names. You may find an account that you paid off years ago still being reported as having a balance that is overdue. You may find that one of your credit card companies is showing you as being a chronically late payer, when you know that you have never been late with a payment in your life.
Note that the credit bureaus do not take responsibility for the accuracy of this data. Rather, they take the approach that they only REPORT the news, they do not make it. But they have a legal responsibility to report the news accurately, and if they are not doing so, it is YOUR responsibility to make them aware of it so they will correct it. But it does not happen automatically.
When you discover an error (and you almost certainly will), you need to file a dispute with the credit bureau that is reporting it. For best results, only submit ONE dispute per envelope. So if you have 5 disputes, you will mail 5 separate envelopes. Although you can file all disputes in one form, studies have indicated that you will have better results if you mail each one separately, and after all, RESULTS are what you are looking for.
After receipt of your dispute of inaccurate information, the credit bureau has 30 days to either verify the data or remove it from your credit report. If they cannot verify it, it must be removed. If they claim to have verified it as correct, your next option is to contact the creditor reporting it. Again, if it is inaccurate, that creditor must correct the way they are reporting it to the credit bureaus.
Understanding the laws of credit reporting and how inaccurate entries on your credit report can lower your credit score is critical to your success, especially since your credit score is being used in more and more places to make decisions about you. For more insights and additional information about how to Raise Your Credit Score as well as getting free copies of your credit reports, please visit our web site at http://www.credit-help-center.com
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