As the nation enters a financial crisis, many consumers are turning to the web for information on how to improve their credit score. Understanding that a higher credit score will likely help them in times of financial concern, these consumers are being met with websites teaching you how to repair your own credit. Between the web sites selling do-it-yourself credit repair kits and others selling e-books on how to repair your own credit, many consumers are being given out-dated information.
If your credit score, sometimes called a FICO score (after the Fair Isaac Corporation) is low, it may not only be a result of problems on your end. Slow pays will certainly have an effect on a consumer’s credit score, but the large majority of credit bureau reports contain at least one inaccuracy. Many consumers’ credit reports contain several errors some of which could impact their score by up to 10%.
If a consumer is in need of improving his or her credit score, it is important that adequate research be done prior to starting the credit repair process. After careful research, many consumers choose to work with a reputable credit repair agency. Credit repair agencies, and the credit repair representatives that they employ, are often well-versed in the nuances of credit reporting.
There are three main credit reporting agencies (CRAs) in the United States: Equifax, Experian and TransUnion. Each of these three agencies use a different algorithm in determining a consumer’s credit score. In addition, the data contained within an individual’s credit bureau report can differ between the three companies. An experienced credit repair agency can work with all three of the credit reporting agencies to ensure that the consumer’s credit report reflects the most up-to-date and accurate information.
A consumer’s credit score, which usually falls between 350 and 850, impacts many aspects of the consumer’s financial life. When a consumer applies for credit, whether it is a credit card, an automobile loan or a mortgage, a credit bureau report is requested. This is an automated process and can be done instantly upon request for credit. Often times, the only thing that a creditor looks at when deciding whether to extend an offer of credit is the credit score. With a sufficiently high credit score, income and employment history may not even come into play.
In addition to receiving better offers of credit, consumers with a higher credit score also pay less for automobile and homeowner’s insurance. Understanding the variety of ways a credit score is used helps a consumer make the decision to repair his credit. A small upfront investment with a credit repair agency ensures that the credit repair process goes smoothly and in the end the money is repaid in lower interest rates and better insurance quotes.