Taking Control of your Credit Score

Taking Control of your Credit Score

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By Rod Davis, CEO, BBB Serving Southeast Florida and the Caribbean

School teaches us many things and we can all remember math, English, history, government, and other classes.   Unfortunately, we are not always taught about finances and the important role credit plays in our lives as consumers.  Even worse, some businesses and scammers will attempt to use our collective ignorance about credit scores to take advantage of consumers. 

 What is a Credit Score and Why is it Important?

The Federal Trade Commission does a good job explaining this topic. 

Credit scoring is a system creditors use to help determine whether to give you credit. It also may be used to help decide the terms you are offered or the rate you will pay for the loan.

Information about you and your credit experiences, like your bill-paying history, the number and type of accounts you have, whether you pay your bills by the date they’re due, collection actions, outstanding debt, and the age of your accounts, is collected from your credit report. Using a statistical program, creditors compare this information to the loan repayment history of consumers with similar profiles. For example, a credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points — a credit score — helps predict how creditworthy you are: how likely it is that you will repay a loan and make the payments when they’re due.

Some insurance companies also use credit report information, along with other factors, to help predict your likelihood of filing an insurance claim and the amount of the claim. They may consider this information when they decide whether to grant you insurance and the amount of the premium they charge. The credit scores insurance companies use sometimes are called “insurance scores” or “credit-based insurance scores.”

Since most consumers will have to use credit to buy a car, a home and/or other major purchases, having a good credit score can help you save hundreds or thousands of dollars over the life of a loan.  Additionally, consumers with a very bad credit score may not be approved for a loan, given insurance, etc. It is wise to know what your credit score is and that it is accurate. 

How do I check out My Credit Score?

The federal Fair Credit Reporting Act (FCRA) requires the credit reporting agencies (Equifax, Experian and TransUnion) provide a free annual credit report every 12 months.  You can obtain your credit report at: 

 To order, visit www.AnnualCreditReport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to:

Annual Credit Report Request Service

P.O. Box 105281

Atlanta, GA 30348-5281

There are many sound alike sites that attempt to make money from this request so please be careful to go to the official site.  You also do not need to visit the three credit reporting agency sites individually. To validate your identity, be prepared to provide your full name, address, SSN, DOB and other unique information about your financial history.  The FTC also provides advice for fixing errors!

Fixing Errors on Your Report

Step One

Tell the credit reporting company, in writing, what information you think is inaccurate.  Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Send your letter by certified mail, “return receipt requested,” so you can document what the credit reporting company received. Keep copies of your dispute letter and enclosures.

Credit reporting companies must investigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the credit reporting company, it must investigate, review the relevant information, and report the results back to the credit reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide credit reporting companies so they can correct the information in your file.

When the investigation is complete, the credit reporting company must give you the results in writing and a free copy of your report if the dispute results in a change. This free report does not count as your annual free report. If an item is changed or deleted, the credit reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The credit reporting company also must send you written notice that includes the name, address, and phone number of the information provider.

If an investigation doesn’t resolve your dispute with the credit reporting company, you can ask that a statement of the dispute be included in your file and in future reports.

Step Two

Tell the information provider (that is, the person, company, or organization that provides information about you to a credit reporting company), in writing, that you dispute an item in your credit report. Include copies (NOT originals) of documents that support your position. If the provider listed an address on your credit report, send your letter to that address. If no address is listed, contact the provider and ask for the correct address to send your letter. If the information provider does not give you an address, you can send your letter to any business address for that provider.

If the provider continues to report the item you disputed to a credit reporting company, it must let the credit reporting company know about your dispute. And if you are correct — that is, if the information you dispute is found to be inaccurate or incomplete — the information provider must tell the credit reporting company to update or delete the item.

It Takes Time

Once the information on your credit report is accurate, the other keys to improving your score are common sense.  Pay bills on time, lower the amount of debt carried and limit the amount of new credit applications/inquiries.