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Just what is a "Credit Bureau"?
A "Credit Bureau" (also called a "Credit Repository" is a privately owned company that gathers and stores records on the payment patterns and credit history of millions of citizens. They generate profits in the billions of dollars by selling these records to potential lenders.
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!
There are three major credit bureaus in the US. They are:
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What is a Credit Report?
By collecting information from public records, debt collectors, the court system and mortgage and other lenders credit bureaus put together information on individual consumers into a file called a "Credit Report."
Your credit report contains information on your open and closed accounts with mortgage lenders, auto loan lenders, credit card companies, and merchant lenders.
It also contains public records such as repossessions, court judgments, liens, foreclosures and bankruptcy.
Now when a lender is evaluating someone for a loan he will contact one (or more) of the credit bureaus and buy a copy of the applicant's 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.
The applicant is granted or denied a loan based on his decision. If he is granted a loan, the credit report and score will determine what interest rate he will have to pay.
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What is a Credit Score?
Each credit Bureau assigns you a 3 digit number based on the data in your credit report. This is called your "Credit Score" and it is meant to reflect your credit worthiness. The higher the score, the better your credit.
This shows you the range of the 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 close.
Click here to get your credit report and score.
In calculating your credit score the credit bureaus will consider five basic factors in various degrees, approximately as such;
Payment History 35%
Have your bill payments been timely?
Have you made payments late?
Just how late?
What is the frequency of late payments?
Are there accounts in collection?
How many?
Does your report show repossessions?
Have you declared bankruptcy?
Present Debt Level 30%
What is the total of all your current debts?
The Duration of Your Credit History 15%
For what length of time have you carried debt? Lenders prefer to see a long history (of positive accounts) instead of a short one
Types of Credit 10%
There are primarily two categories of accounts, "installment" and "revolving".
Car and mortgage loans are installment loans. You pay at predetermined intervals and pay a set amount each payment.
With the revolving account you may pay more or less with each payment. Credit card accounts are of this category, but they often do require a minimum payment.
Lenders like to see a "healthy mix" of these two.
Pursuit of New Credit 10%
Are there are many recent "inquiries" on your credit report (lenders buying your credit report)?
Lenders would rather not see too many recent inquiries. It could mean that the consumer is in danger of overextending himself.
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How does this impact me?
Credit bureaus keep records on millions of citizens, so it should come as no shock that there will be a few mistakes. But sadly the mistakes number more than just the few. In fact, it's estimated that anywhere from a third to a staggering 90% of all credit reports have mistakes.
Let's put it differently - even using conservative figures there's a 1 out of 3 chance that there are errors on your credit report!
Considering how important your credit score is those are NOT very good odds - and that's based on the LOW estimate!
Just how many mistakes would it take to negatively impact your credit score?
............ It takes only one............
Now a person would think that regarding something as critical as your credit ... something that impacts your life to such a degree ... that there would be more effort made to make sure reports are accurate.
Are you thinking right now "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 citizens have the right to challenge the accuracy of information in their credit report. The credit bureaus have 30 days to investigate consumer disputes. If during those 30 days they cannot or do not verify the accuracy of the information, they must remove it.
Although the FCRA is a very welcome law for consumers, there are still problems.
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 try to make it difficult for consumers. They are very adept at utilizing a "loophole" in the FCRA, the "frivolous" issue. The credit bureaus don't have to investigate a dispute they deem "frivolous". And worst of all, it's the credit bureaus who initially decide whether a dispute is frivolous.
Now there's a case of putting the fox in charge of the henhouse!
Not surprisingly the bureaus are quick to label disputes as frivolous even if they are not. And although the consumer can always take them to court if they can afford to, most people on wealthy enough to hire the high priced lawyers the credit bureaus can hire ... especially those who are paying outlandish interest rates because of mistakes on their credit report!
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What do you do to help me?
We're well skilled at tackling the obstacles the credit bureaus use to frustrate citizens and obstruct their efforts to get errors removed from their credit report. Utilizing your rights under the Fair Credit Reporting Act we guide you in challenging the correctness of data on your report to delete items that could be harming your credit score.
We know how to deal with the credit bureaus and make things happen!
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Can I legally get 3rd party help with my credit?
Although the credit bureaus don't want you getting help in challenging the accuracy of your credit report, don't ever let them convince you that it's in any way to legal to do so. It unquestionably is NOT!
Another tactic they like to employ is to reply to your dispute and try to convince you that utilizing help is a waste of your money and that all credit repair companies are scammers! And while it's true that some are, what the bureaus are trying to do is NOT to protect consumers ... it's to protect credit bureau profits by putting obstacles in the way of consumers!
Under the FCRA every consumer has the right to dispute - on his own - information on his credit report. But likewise, everyone also has the right to prepare his own tax return, and yet many people would rather hire an accountant to do their taxes rather than try to navigate the complexities of the tax code.
By allowing a professional to take care of your credit you stand the best hope of credit score improvement ... and getting back the good credit you deserve!
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How much improvement can I expect in my credit score?
There are going to be variations in results, but in most every case there is going to be major improvement.
And remember!
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 when that ability was previously lacking, and less stress and mental discomfort.
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Am I guaranteed results?
No one (who's at all honest) can guarantee results when it comes to fixing bad credit. And no LEGITIMATE company will.
Every person's situation is different. But most of the time there will be major improvement to one's credit report and credit score ... improvement that will enable the client to get a mortgage, credit card, or car loan ... 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'll be able to buy a home.
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How much time will this process take?
That will depend on your personal situation. Your credit history took form over the span of many years, and it's 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 more time. It can take a year or longer, but this is rarely the case.
But on average you're likely to see major improvement in your credit in 4 - 8 months time.
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