What is a Credit Report

What is a credit report?
FACT: The Federal Reserve Board (FRB) shares that Your Identity, Your Existing Credit, Your Public Records and Inquiries are all parts of a consumer credit report.
What they fail to mention is – there are some things that are NOT reported that many people think ARE reported or affect their scores.

- Your Household Income or Personal Income is NOT reported or used for scoring.
- If you are married your credit files are NOT merged together. (Only joint accounts
will show on each others’ credit reports.)
- Even though your birthday is reported your age cannot affect your score or chances of
approval. (One exception is the reverse mortgage which has an age requirement.)

Where Can I get a Copy of My Credit Report?
FACT: You can get a one free copy of your credit report from each bureau every 12 months at www.annualcreditreport.com .
Now here’s a secret that may save you some money. Instead of using a credit monitoring service, just log on to the free site and pull one different bureau report every 4 months!

Does the Credit Bureau Decide Whether To Grant Me Credit?

FACT: Another great “truism” is that the credit bureaus DON’T make any credit decisions.

The creditor uses the bureaus information along with other information (like your income) to determine whether or not to extend credit to you. If a score is low studies have shown that up to 79% of credit reports have errors! So even though the credit bureaus generate a score, it doesn’t mean it’s accurate.

How Can I Stop the Unsolicited Credit Card Offers?
FACT: You can OPT-OUT from creditors marketing lists by going to www.optoutprescreen.com and completing the information. You can choose to opt out for 5 years or permanently. To opt-out permanently you will need to mail in the documents requested off the website. This will cut down on your unsolicited mail.
(Don’t worry, if you change your mind you can turn it back on again!)

OPT-OUT - the credit bureaus are in the business of selling your information and making money off of the sale, it's legal and it's done every day.

What is a credit score? How is my credit score calculated?
FACT: The FRB states that your score is “a number based on your information”. True, but there is more.

The FICO algorithms (FICO 70% of the credit scoring market) actually calculate the odds of you having a 90 day late in a 24 month period on a loan obligation. I know its odd isn’t it? That’s why a 90 day late or more has such a negative impact on your scores!

Your credit score is like a “snapshot in time”. The score is calculated at that precise moment in time. So if you can change an inaccurate or un-validated item (i.e. repair, delete or remove) then your score will change immediately!

No mention was made of Vantage Score which has new algorithms and claims to have higher consumer scores. (They currently only have 6-7% of the markets, but are used more in consumer loans - store credit cards for example.)

Credit Reporting Errors….

FACT: This is the last section the FRB speaks about in their consumer report. This has advice for consumers to dispute credit reporting errors on their own. And of course you can do this all yourself. (And you can operate on yourself if you need surgery too…and build your own home… and change your own oil…..)

Seriously you can repair your own credit. In fact the FTC (Federal Trade Commission) requires that credit repair organizations have to tell the clients this in their contracts.

But they make no mention of using an outside attorney or legitimate credit restoration organization to assist you if you need it. You have legal rights under the Fair Credit Reporting Act that your information be 100% accurate and 100% validated that it’s yours. If not they have to permanently delete it. It’s easy to say but usually difficult to get the credit bureaus and creditors to perform due diligence.

It’s legal and ethical for you to get professional assistance for credit restoration. Especially if you have had a divorce, bankruptcy, foreclosure, short sale or medical emergency that’s caused negative or erroneous information to appear on your report.

Another reason we know its legal: If credit repair wasn’t legal a law would not have passed governing Credit Repair Organizations! It’s called Credit Repair Organization’s Act (CROA) and it was passed to govern and protect the consumer.

Spanish Version – When you use the link to the website in the links section, there is a Spanish version on the lower, right hand side of the web page.

Links
The Consumer's Guide to Credit Reports and Credit Scores".
http://www.federalreserve.gov/creditreports/ "


Jennifer Buchanan
Certified Mortgage Planning Specialist
MetLife Home Loans
jbuchanan@metlife.com