The modern day credit bureau is something ill understood and often feared by many average working people. We vaguely know about them and sometimes know that they affect our credit report, but we only really think about them in the context of what they can do to our credit card deals. If we have bad credit, they can prevent us from getting any good credit card deals. If we have good credit, they can get us all the new credit card deals.
While this is reasonably accurate (though not directly so), it is hardly sufficient. To really understand credit bureaus, you need to do some research. By the end of this article, you should have a good idea of what a credit bureau is and what its role is influencing your life, regardless of whether you have excellent credit or poor credit.
General Information About Credit Bureaus
Credit bureaus act as go betweens, playing the middle man in the relationship between you and your creditors. Very simply put, that's all they do; nothing more and nothing less. They research and compile a listing of information on a person that they then give to all the different potential creditors that include but are not limited to the following: landlords, banks, credit card companies and employers.
In the United States, the lion's share of the credit reporting is done by three different bureaus: Experian, Equifax and TransUnion.
Their basic mode of operation is to first establish relationships with all of your creditors, amongst which usually include private agencies as well as public ones. From these creditors as well as public court records they then compile a list of all of the activities that could affect your credit and assemble that list into what eventually becomes your credit report.
The reporting is real time in terms of when it is requested. The credit score given to the requesting company or individual is calculated on the day it was requested. This score is the most important piece of information given out by the credit bureau and the thing that will impact whether you can get top credit cards or whether a poor credit score results in a denial. These credit scores can be anywhere from 300 to 900, with most companies considering 620 or higher to be good credit and 720 or higher to be excellent credit.
Determining Your Credit Score
Unless some major event has happened (like a bankruptcy for example), credit scores are calculated factoring in events that have occurred over the last two years. Older events might influence the score as well, but more recent information usually carries a higher weighting than older, more historical data.
Credit scores are calculated using a formula that takes many variables into account. Those variables include, but are not limited to the following:
- The method of payment you use to settle accounts, as well as factors such as whether or not an automatic payment has been set up.
- The amount of money that you the consumer currently owe to all of your creditors.
- How long these debts have been around. The longer an unpaid debt exists, the more negative an effect it will have on a credit score.
- The different kinds of credit that you have accounts open with. These include but are not limited to credit cards, loans and lines of credit.
- The relationship between your available credit and your used credit. Maxed out credit will reflect more negatively on a score than partially used credit.
- The frequency with which you apply for credit.
- Other variables may be included, but primarily these are the ones that are going to make or break your credit card deals.
Take a Look At Your Credit Report
Since your credit score could end up hampering your ability to get all the best credit cards, it is important to check your report to ensure that it is correct and up to date. Credit bureaus are required to provide you with a copy of your credit report once you ask for it and obtaining a copy of your report from the major credit bureaus (refer to the three given earlier in this article if you live in the United States) should not be a problem. Additionally, if you are unemployed and looking for work, on welfare or think you have been a victim of credit fraud, you might be able to get the small report fee waived.
As you look through each credit report, jot down anything that is inaccurate or outdated on a separate piece of paper. Once that is done, add to that list anything that is missing from your credit report. Remember that your credit report is extremely important and any new credit card deals you attempt to make are going to ultimately be decided by your credit score. Go online and compare credit cards for people with good and bad credit, it should immediately become obvious which ones are more desirable to have. Ensuring your report is accurate is the first step to repairing it. With that in mind, look closely at absolutely everything.
How Credit History Corrections Are Applied
There is a timeline for corrections to your credit history being adopted and the timeline is closely linked to the procedure that is in place for corrections and disputes. Credit bureaus are legally required to work with you (or your representative if you've gone that route) to make your report as accurate as possible. Once you have your list from the previous step, here is the five step process to getting your credit report completely accurate (and maybe then finally being able to get some good credit card deals):
1. You inform the bureau in question (or bureaus in question) of the mistakes in your report. This must (absolutely must) be done in writing so that all parties have confirmation of the request. Include proof (certified photocopies, do not ever send in an original) of the facts that you state in your letter.
2. Once the credit bureau has received your request in writing, they have 30 days to start an investigation into your credit report. Note that they have 30 days to start the investigation, but it could take longer to finish it.
3. If an item is erroneous, the bureau makes changes to it. They are legally required to make any and all accurate changes that you have brought to their attention.
4. The bureau must supply you (in writing, demand this if they do not wish to comply) with a list of changes that have been made as well as any other actions that may have resulted from your letter. Bureaus will sometimes be tardy on this or not want to do it all, but it is a legal requirement on their part, so don't feel shy about asking them for it.
5. Another legal requirement is that if you want, the bureau has to send updated credit reports to any companies or individuals that might have requested within the last half year period. Bureaus normally would not do this unless you ask them, but once you have put in a request, the law requires them to comply with it.
Credit reports require you to be ever vigilant to keep them accurate and up to date. Failing to do so could be the difference in obtaining the best credit card deals, good credit card deals or simply new credit card deals that are sub par due to bad credit.
If ever you feel yourself questioning the use of doing all this research and taking all these notes, take a break and log onto the internet. Use the internet to compare credit cards and the benefits they give to people with good and bad credit. Then take a look at all the top credit card deals and look at the requirements for them. Doing both of those things should give you enough motivation to get back in there and start working on your report again.
|
