Home Buddies on the Credit Bureau Secrets We All Should Know
If someone asked you “What exactly is a credit bureau?” would you know? Obviously these bureaus have a lot of mystery surrounding them. The point of credit bureaus is simply to store payment history, credit and collection records, and particular legal details about consumers and businesses.
These records are sold (emphasis on sold) to bankers when a consumer or business tries to apply for credit. The three most widely recognized US credit bureaus are Equifax, Experian and TransUnion. Even Dun and Bradstreet Corporation is considered a credit bureau that is known for reporting business credit information exclusively. And don’t forget about the increasing importance of Innovis.
The credit bureaus store over 1 billion individual consumer and business records. About 2 billion individual credit transactions are entered into those records every month. That’s a lot of information to manage correctly don’t you think?
Most people don’t realize that roughly 80% of all credit reports have errors. Most of these mistakes go unnoticed. That is because errors may only get found if you get declined for credit. However, most people just say “ok” to their score because of the psychological effect that the acceptance of one mishap in your past can make. We tell ourselves, “Yeah, I know it’s bad cause of that late payment I had.” And so we just accept it.
The United States Government has recently laid out obligations for the bureaus to maintain accurate records along with obligates them to have a way for consumers to view their records. It also established improvements for responding to consumer complaints.
Credit reporting agencies generate their profits by charging a fee to banks, lenders, credit card companies and online agencies for pulling your credit report. They actually don’t make any money at all for allocating a staff member to look into complaints or disputes into any mistakes found in your personal records.
Here is a little known fact about the credit reporting bureaus:
Depending on who requests your credit information, your score could have up to 92 different variations. That means each of the bureaus could have potentially 23 varying scores outside of your actual real score.
The score you receive will vary depending on whether a major reporting bureau pulled it or whether an online company requested it. It also depends on which profile has been given to you during the request.
For example, if you apply for your score through an internet agency you will be required to match up approximately 18 points of identification to verify who you are. Unfortunately when a mortgage broker requests your report, they only need around 9 elements of identification to match which allows room for more errors and therefore may lower your score.
There are some allegations surrounding credit bureaus specifically giving lower credit scores than are actually true as their way of avoiding a potential law suit from a lender in the event that the borrower can’t repay the loan.
It makes you wonder whether your credit report is there to protect you, the bureaus or the lenders!
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