Find your Financial Confidence

Whenever you apply for any type of credit or financing, a credit report is pulled from at least one out of the three (3) major credit bureaus. While there are hundreds of smaller credit bureaus around the country, virtually every credit bureau is affiliated with Experian, Trans Union, or Equifax. These credit bureaus collect and maintain information on the vast majority of Americans, but they are not affiliated with the government in any way. The credit bureaus are for-profit corporations that sell your personal information for money. 

Credit bureaus receive your personal information through the same lenders who grant you credit. The credit bureaus have agreements with each of these credit grantors (Target, Wal-Mart, Kohl’s Etc.)  That requires the credit grantor to inform the credit bureaus of everything that occurs in your relationship with the credit grantor. If you make a late payment, the negative listing is rapidly reported to at least one out of the three (3) major credit bureaus, If not all three (3) and is added to your credit history immediately.

Credit reports are not just a record keeping system of how you are currently managing your credit report accounts. Credit reports are histories of everything that you are doing with your credit presently, and everything that you have done in the past. Credit bureaus collect this information, list it on your credit report, and then sell it to other credit grantors who wish to see your credit history before they decide to lend you money. 

The credit grantors who review your credit are especially interested in any negative credit. If you ever had tendencies to pay late or disregard your financial obligations in the past, the creditor’s computers will immediately reject your application. Like in grade school. Your credit report is your financial report to the world. 

The three (3) national bureaus are three (3) companies (that make a profit in exchange for service/goods). They are not here for your good. They are companies looking to get paid. However, the Federal Trade Commission (a.k.a. “FTC”) created the FCRA (or Federal Credit Reporting Act), which regulates how the bureaus operate, and the rules they are held too.

The three (3) major bureaus are Trans Union, Experian, and Equifax. Your credit score comes from a company that make judging cards. The Fair, Isaac & Company took one (1) million records from all the bureaus and started sorting them to find trends. The model became well known as the “FICO” model and is used by the bureaus. Think of it as a bell curve (small percentage doing extremely perfect or extremely awful, most of the numbers fall in the middle)

Creditors will likely use these fico score to evaluate your credit rather than actually thumbing through your report and looking at the actual detail. (This is the common trend, now practically everyone is just a number. So make sure your number is accurate!). Creditors generally look for credit scores of 620 or higher for most financial purposes. A score higher than 680 opens more doors and can often give you lower rates & larger purposes. Creditors make the rule for what score they feel comfortable with, and the FICO scores determine that score based on your credit history. So where do you fit in the picture? By having a good credit report/history and looking for all the mistakes the three major credit bureaus make. An error made by the bureau will lower your score and the Lender/Creditor does not review your report for accuracy (even if you have proof). It is all based on scores these days. (The scores are supposed to take the review work away from creditors to make their job much easier.) So what things make up your score? … It is largely based on the following factors…

• Payment History-      accounts for 35% of your total credit score out of 100 %
• Outstanding      Debt-accounts for 30% of your total credit score out of 100 %
• The length of time your      credit history existence- accounts for 15% of your total credit score out      of 100 % 
• Recent inquiries-      accounts for 10 % of your total credit score out of 100 %
• Types of credit in use-      account for 10 % of your total credit score out of 100 %
• That’s it----- these      five (5) things make up the 100 % of credit scores 

As of September 1, 2005 all states can obtain a FREE CREDIT REPORT. 

This isn’t as easy as you might think, but then again, why would the credit bureaus want to make it easy! 

You should be able to go to the credit bureau’s web site and order a free report, but that’s easier said than done. There are caveats (warnings)

EXPERIAN:

If you enroll in their “ Credit Manager” program at www.Experian.com, you get a free report. However, there is an expense associated with this “free” report. After a 30-day trial period, a charge of $9.95 is automatically billed to your credit card .To avoid being charged, you can cancel the service within 30-business days, but come on, who really pays that close attention to the calendar to do that? Free should be “free”!

TRANS UNION:

When you order a “3-in-1” credit report for $30.00, they will send you a “free” credit score.

Where to get Your Free Credit Report

EQUIFAX:

Same as the others, purchase something first, gets something free.

Don’t get your hopes down yet… The Federal Trade Commission came through… 

The Federal Trade Commission finally got it right and put some new regulations into effect. They set up a website for consumers to request their free credit report. Visit: 

www.AnnualCreditReport.com 

The good news is you can also call 1-877-322-8228 or write to P.O. Box 105281, Atlanta Georgia, 30348-5281.

Now that’s much better. Simple, and easy to understand as well as easy to do. BUT – there’s one more caveat (warning)-although you do get your truly “free” annual credit report, you won’t get your credit score. A report is a report; a credit score is something completely different. The fico score is that perfect little number banks and financial institutions like to use to avoid actually looking at your credit report and making a human decision. You’ll have to pay about $10.00 to an agency for this service. But even without your fico score, you can be aware of how your credit / report affects you now and in the future, in this credit driven world. The facts are the facts and you can’t change that. However, you can work effectively and efficiently within the perimeters of the system when you take the time to find out how it works…it will benefit you greatly.