In today’s economy, it is more difficult than ever to qualify for a mortgage. With foreclosures on the rise, your credit score needs to be good, if not stellar, for lenders to approve your loan.
Still, very few people understand credit basics. Even people who have owned multiple homes do not understand exactly how credit works.
This brings us to the most basic credit question of all. What exactly is a credit bureau?
A credit bureau is a huge repository that stores date on most Americans. This information includes names, social security numbers, addresses, employment and, of course, credit history.
People often believe that when something is incorrect in there credit file, that the credit bureau has caused this.
Actually, this is not true! It is the creditor that has reported the account incorrectly.
The credit bureaus primary function is to collect information. Unfortunately, they report the data given to them by lenders without verifying anything.
It is estimated that between 40 and 70% of credit reports contain errors. These errors can lead to increased interest rates, credit refusal and even job denial.
Fortunately, the federal government recognizes that without your participation, your credit file is a collection of unverified information.
The most important of these to understand is that the only time the data in your credit bureau is verified is if you file a dispute with each of the three credit bureaus.
When this happens, the creditor has 30 days to prove to the credit bureau that the item is accurate. If they fail to verify the item as accurate within this time frame, the item is required by law to be removed from your credit report.
Consistent monitoring of your credit file is critical to maintaining a strong credit score. While there are many resources out there to help with this, the most important component is individual knowledge and involvement.
Tags: Credit, credit repair, credit repair help, credit reporting, credit tips, Home equity loans, home loan, mortgage, real estate