Understanding Credit Scores

Are you like the 79% of Americans that have errors on their report? Are past credit issues unfairly re-reporting and causing you to pay higher interest rates?

Did you know that the 3 major credit bureaus are not government agencies, but are private companies? And were you aware that, unlike every other financial institution in America, these 3 bureaus are not required to validate information that they report on you? The burden of keeping your report clean is on you as the consumer, and most credit reports have inaccurate information or information that legally should be removed but hasn't been challenged by anyone. Americans pay billions of dollars in higher interest each year because of incorrect information on their reports, and most of them have never tried to fix this problem.

The Credit Scoring System

Our nation's credit scoring system is unlike any other program that we encounter as clients and customers of the leading financial institutions in our economy. Every major financial entity in the United States—including investment firms, insurance companies, real estate organizations, mortgage lenders, banks and credit unions—must report ACCURATE information about you, the consumer. They are NOT allowed to see your information with any other entity without your consent.

Many forms and systems are used by all of the above-mentioned groups to make sure that they stay in strict compliance with the U.S. laws. This is for your protection and is completely understandable. Companies have full departments that do nothing but make sure that your information is protected and is accurate.

Now let's contrast that with the credit scoring system in the United States. The three major bureaus ROUTINELY report inaccurate information! According to the Public Interest Research Groups (PIRG), a survey they conducted found that a whopping 79% of credit reports had errors—that's nearly four in five, which means that your credit report has a 79% chance of having errors on it!

The PIRG survey also concluded that 25% or credit reports had serious errors—ones that were bad enough to cause a lender to REFUSE to offer you credit. This can affect someone's ability to buy a home or car, and can even cause insurance rates to be unnecessarily high. Further, even your next job application might be rejected because of errors on your credit report. The system's status quo is undoubtedly broken, and the bureaus defend themselves by stating that most complaints are responded to and fixed within a reasonable amount of time.

Here is where I beg to differ with their assessment. We as consumers shouldn't have to fight the bureaus to make sure everything is reported correctly! There is NO penalty for these large, powerful private corporations (yes, that's right—they are NOT government entities as most Americans believe) to post inaccurate information on your report. Why are they under different rules than all of the other financial institutions? If a bank misreports your bank balance and it causes you harm, THEY are responsible for that activity. Not so when it comes to the credit bureaus. And it has been the experience of many financial professionals and consumers that their requests for clarity on credit reports can be not only exhausting and time-consuming, but also expensive. When you are paying higher rates for practically everything you own JUST BECAUSE THERE ARE ERRORS on your report, that should be a criminal offense in my opinion. It costs U.S. citizens Billions of dollars in unnecessary interest charges every year, and again there is no penalty - and therefore no deterrent - for posting inaccurate information on your report.

How to Fix Your Credit Score

Below is some information to start the process towards true credit repair, restoration, and/or maintenance.

This information is yours to keep and to pass along to anyone you know. It has been compiled through years of dealing with the credit reporting system and isn't intended to be the only resource you use to work on your credit rating. It is, however, a good starting point.

• Understanding Credit Scores
• Credit 101

There are many good resources out there—I encourage you to start seeking out all of the information you can find and use it immediately. This is a major problem in America, and one that most people have not looked into. Your credit rating is your responsibility, and unfortunately we have to fight the very systems that should be protecting us in order to keep our credit clean.

It is possible to do your own credit repair/restoration. Go online and look for information about how to write the letters and follow the protocols of the three major bureaus. Here are their websites:

Equifax - www.equifax.com

Experian - www.experian.com

Transunion - www.transunion.com

If, on the other hand, you are interested in using a repair/restoration agency, we have a relationship with a very trustworthy and experienced company and will gladly make a referral for you. Just click HERE to request more information about credit repair/restoration services.

Explanation of Credit Scores

Here is a very generic explanation of credit scores so you have a better understanding of how to interpret your score:

Credit score range: 300 (lowest) to 850 (highest)
Median score for all American citizens: 723