You need to know that there are three major credit reporting agencies in the US, and each of them maintain a credit profile about you. These three agencies are Equifax, Experian, and Trans Union. The primary task of these agencies is to keep track of your credit history and credit performance for all present and past credit obligations, even if an account has been closed for a number of years. When you think about that, that means that for millions of Americans, each of whom has 10-15 or more credit accounts during their lifetime, these credit reporting agencies are maintaining billions of records. And since some lenders only report to one of them and others report to 2 or 3 of them, your credit history is different at each credit bureau.
Over the years, they change due to better pricing from one versus another. All of this adds up to the fact that while most consumers do not know it, but your credit report almost certainly contains errors. The even worse part is that if YOU do not initiate action to get those errors corrected, the errors remain on your file, year after year.
All of this data adds up to create a credit score or credit rating for you, which is a number that reflects your ability or willingness to repay a loan, whether that is a mortgage, a car loan, a department store credit card, your Visa card, etc. So how does that affect you? Because the higher and better your credit score, the more favorable of a risk you are to the lender.
Just as one example, I personally know some people who were paying an 8.175% interest rate on their mortgage. This couple took steps to improve their credit score, and when they had finished and re-applied to their mortgage company, they were approved for a new interest rate of 5.85%. Over the course of their mortgage loan, this alone will save them several thousand dollars.
Many people want the easy way out, so they pay fees for a credit repair service. This is not necessary and you are throwing money out the window. A credit repair service will not do anything that you cannot do yourself, but you need to be motivated to follow up on the various requests that you will be sending in. You see, you can dispute negative information that appears on your credit report, even if it is accurate. If it is not accurate, your job is easier because the credit bureau must remove the negative information if it cannot be proved. But even for negative information that is accurate, perhaps a loan from your past, the original lender may not be in a position to verify that data, and if it cannot be proven after you have disputed it, it needs to be removed from your credit report.
Obtain a copy of your credit report, one from each of the three major agencies, and then start going over it carefully. You will be looking for things that would reflect negatively on you if someone were looking at this and considering your application for a new line of credit. When you find something (and you will), then go through the dispute process, because when that information is corrected, your credit score will go up.
Over the years, they change due to better pricing from one versus another. All of this adds up to the fact that while most consumers do not know it, but your credit report almost certainly contains errors. The even worse part is that if YOU do not initiate action to get those errors corrected, the errors remain on your file, year after year.
All of this data adds up to create a credit score or credit rating for you, which is a number that reflects your ability or willingness to repay a loan, whether that is a mortgage, a car loan, a department store credit card, your Visa card, etc. So how does that affect you? Because the higher and better your credit score, the more favorable of a risk you are to the lender.
Just as one example, I personally know some people who were paying an 8.175% interest rate on their mortgage. This couple took steps to improve their credit score, and when they had finished and re-applied to their mortgage company, they were approved for a new interest rate of 5.85%. Over the course of their mortgage loan, this alone will save them several thousand dollars.
Many people want the easy way out, so they pay fees for a credit repair service. This is not necessary and you are throwing money out the window. A credit repair service will not do anything that you cannot do yourself, but you need to be motivated to follow up on the various requests that you will be sending in. You see, you can dispute negative information that appears on your credit report, even if it is accurate. If it is not accurate, your job is easier because the credit bureau must remove the negative information if it cannot be proved. But even for negative information that is accurate, perhaps a loan from your past, the original lender may not be in a position to verify that data, and if it cannot be proven after you have disputed it, it needs to be removed from your credit report.
Obtain a copy of your credit report, one from each of the three major agencies, and then start going over it carefully. You will be looking for things that would reflect negatively on you if someone were looking at this and considering your application for a new line of credit. When you find something (and you will), then go through the dispute process, because when that information is corrected, your credit score will go up.
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