Credit Reports

Do you know what lies within your credit report?

It's widely reported that 1 in 4 credit reports have errors. If you don't review your credit reports on a regular basis, you may be paying for someone else's mistakes without knowing about it.

When an ID theft occurs (or inaccurate credit reporting), interest rates may rise -along with your credit card payments. When unpaid bogus accounts contaminate credit reports, it can take months or years to correct the errors, leaving one to be denied credit opportunities, pay higher auto insurance premiums and steeper interest rates due all due to lowered lowered credit scores, causing once affordable payments to be unmanageable without warning.

What you don't know -can hurt you!

Many errors contained in consumer credit reports can block a consumer from obtaining employment, housing or affordable interest rates and insurance premiums.

Inaccuracies can create the appearance of a consumer being over-extended, and falsely, as a poor credit risk. Often times the consumer is unaware there is even a problem hidden within one or more of their credit reports until being denied for credit.

Many common errors found in credit reports include:

• Inaccurate personal information such as misspelled names, wrong Social Security numbers, inaccurate birth dates, inaccurate information about a spouse and out of date address and employment information
• "Closed" accounts listed as "open
• Reports that duplicate same mortgage or loans. This mistake is common and often occurs when loans are serviced or sold
• Co-mingling of credit belonging to someone one with a similar name (or family member)
• Notations of late fees for accounts that were paid on time
• Bogus debt collection accounts on debts that are now owed or even known
  

Aside from inaccuracies, we need to monitor our credit reports for fraudulent activity caused by identity theft -the fastest growing crime in America.

Your Credit Report
Your credit report contains information about where you live, how you pay your bills, and whether you've been sued, arrested, or filed for bankruptcy. Consumer reporting companies sell the information in your report to businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.

The federal Fair Credit Reporting Act (FCRA) promotes the accuracy and privacy of information in the files of the nation's consumer reporting companies. Under the Fair Credit Reporting Act:

• You have the right to receive a copy of your credit report annually. The copy of your report must contain all the information in your file at the time of your request. You can get your free credit report at annualcreditreport.com or by calling 877-322-8228.
• Under federal law, you're also entitled to a free report if a company takes adverse action against you, like denying your application for credit, insurance, or employment, and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You're also entitled to one free report a year if you're unemployed and plan to look for a job within 60 days; if you're on welfare; or if your report is inaccurate because of fraud, including identity theft. You have the right to know who asked for your report within the past year-two years for employment related requests.
• If a company denies your application, you have the right to the name and address of the consumer reporting company they contacted, provided the denial was based on information given by the consumer reporting company.
• If you question the accuracy or completeness of information in your report, you have the right to file a dispute with the consumer reporting company and the information provider (that is, the person, company, or organization that provided information about you to the consumer reporting company). Both the consumer reporting company and the information provider are obligated to investigate your claim, and responsible for correcting inaccurate or incomplete information in your report
• You have a right to add a summary explanation to your credit report if your dispute is not resolved to your satisfaction. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past-but expect to be charged for that.

Track and verify your payments to make sure your credit report is accurate!

Too many loans are often paid without the borrower receiving a monthly statement.

Often times we are forced to make payments using payment coupon books. This method is dangerous. Without the aid of a monthly statement, we can not track, verify and confirm our payments are applied accurately-or even received. If a mistake isn't caught early enough-fraud or accounting errors are compounded and the problem can go undetected for years leaving it impossible to correct when and if you have a dispute. Don't overlook the importance of tracking your auto and student loan payments. Without verifying how your payments are applied-you may not k now about any misapplications of payments-until the damage has been done to both your loan accounting and your credit reports.

• Many times Payments made timely have been erroneously reported as 30, 60 or 90 days late-without the borrower's knowledge
• If additional principal payments are applied it is even more important to track how your payments are applied in order to make sure one error doesn't cause a domino effect of late fees and penalty payments that ultimately extend the life of your loan and cost you money.
  

If you don't have access to a statement and use payment coupon books, call your mortgage servicing company every 6 months and request a payment history schedule.

See: Finding "free" credit reports requires knowing where to look. 

Credit Scores: Garbage in = Garbage Out
FICO credit scores range from a low of 350 to a high of 850. The higher your credit score is, the less you have to pay in interest when you take out a loan. A low FICO score can cause your insurance rates to go up, and can even prevent you from getting a job. This is because credit scores aren't used solely for the purpose of granting credit. Insurance companies use them against you when issuing an insurance policy, and many employers use them to see how "responsible" you are.

If you think that your credit score is determined by human beings, you would be incorrect.

Credit scores are determined by a mathematical algorithm that is a closely guarded secret. There is nobody sitting in a room someplace, reviewing your credit history and then assigning you a number. Instead, your information is fed into a computer that simply spits out a number.

Because 79% of credit reports contain errors, the data used to determine your credit score is likely incorrect. Yet that three digit score is your report card -one that often determines what car you can afford to drive and what home you can afford to buy.

Why is it so difficult to correct inaccurate or fraudulent information once it lands on a consumer's credit report? The answer may be found in what we don't hear...

The Top 10 Things You Will Never Hear From The Big 3 Credit Bureaus...

10. A human voice inviting you to come into a local office

9. You're right...we're wrong and we apologize!

8. It's your credit score...we're not going to make you pay for it anymore!

7. We should pay you for letting us sell your information. And we'll monitor it for free. What a great concept!

6. We admit our system is broken. We're going to stop blaming others and actually fix it!

5. Yes, we should use some of our billions to open branch offices. Again...new concept!

4. Yes, debt collectors quite often report erroneous debts. We will make them provide verification of the debt -before it lands on your credit report.

3. You're right our singing pirates confuse the public -we'll start running public service announcements advising where to get the really free credit reports.

2. We're going to get serious about doing our part to fix this nasty identity theft problem and clean up our sloppy credit reporting procedures.

1. Uh...no, we're not really God -sometimes we just role-play!

See these earlier articles:

Consumers Suing to Correct Bad Credit Reports Read article

"7 Steps to Fixing Your Credit Report Read article