When it comes to going into battle to repair credit, the best weapon you can possess is knowledge. The more you know about how the system works the better armed you are to take action to get inaccuracies and erroneous information resolved. If you think about credit reports, approximately 75% of the country’s population is 18 years and older, making them eligible for credit bureau reporting. That means millions of people have an existing FICO score, telling creditors just how creditworthy they are for taking out loans, such as mortgage or car, securing a credit card, and so on.
The FICO scoring system used by the credit bureaus is about 45 years old. The system was designed and is still used today to make lending not as discriminatory and credit more available. However, while we have seen a huge improvement over the years in the way information is collected and shared, there remains a problem in that credit reports are inaccurate much of the time. Making matters worse, these substantial errors are being used and shared among many companies without you even knowing it. Therefore, if your FICO score is incorrect, creditors are receiving false information about you and your creditworthiness.
The bigger problem is that the majority of people have no idea their FICO score or the proper way to obtain it. In fact, it is estimated that just 2% of the population know their score and only 3% could tell you the names of the three primary reporting agencies if asked. As you can see, this lack of information is hurting people every day who want to buy a home, a car, a boat, rent an apartment, and in some cases, get a job. Yes, even potential employers are now looking at credit history to determine if a person is a good candidate for hire. To gain control of your destiny, you need to learn your FICO score so you can get busy tackling any credit repair issues.
Again, information is power and power is resolution. First, you can obtain your FICO score through any of the main credit bureaus, which includes TransUnion, Experian, and Equifax. What happens is that once a month, your creditors, or financial institutions send these credit bureaus files that are comprised of your account number, type of credit, outstanding balance, any collection action, and payment history. Considering these agencies receive more than 4.5 billion pieces of data every month and over one billion credit reports are generated annually, there has to be mistakes.
What many people do not realize is that FICO scores contain more than just creditor information on accounts. These reports also contain public records, which would include judgments, bankruptcy, liens, foreclosures, and even past due child support. Any negative information can be maintained on your record up to seven years although some items can remain up to ten. In fighting to repair credit, the most important strategic move you can make is earning your score and reviewing your credit report so you know where to start the battle.
FICO, which is the Fair Isaac Corporation score, is responsible for providing financial information to 10 of the world’s largest banks, as well as companies around the globe, in more than 60 countries to be exact. The way the FICO score words is by awarding points for every factor that could be used to predict the possibility of you repaying debt on schedule.
All scores are three-digit with a perfect score being 850. Obviously, the higher your score the better chance you will receive credit and lower interest rates. This score is broken down by categories to include payment history, amount owed, and the length of credit history, new credit, and types of credit used. Anytime your credit score falls lower than 650, you would not be considered a good candidate for credit, and lender’s interest rates would be significantly higher than if you had a score of even 700.
Stop accepting less than you deserve because of your FICO score. You can start today by ordering a copy of your credit report from all three bureaus and then going through each to identify discrepancies. Armed with this information, you can file a formal dispute, demanding that false, misleading, inaccurate, or erroneous information be removed. The credit bureau is then legally obligated to follow up on your dispute and if information is confirmed wrong, it must be removed under the Fair Credit Reporting Act. You can have that house, car, boat, credit card, or job that you want but first, you need to go through the process of credit repair.
