Credit Score: Cottage Industry
I’m not sure which is more true. Necessity is the inventor of business practices, or business practices invent necessity. However you look at it, a recent change at Experian has given rise to a cottage industry.
Experian has changed how they calculate credit scores. They are introducing rental payments as a part of their formula for credit score evaluation.
It is this business practice change that has attracted the profiteering vultures. I say that tongue in cheek. There is nothing wrong with making an honest living.
The business opportunity is simply a new spin on offering bill paying services. Companies are offering two services. And of course there is a nominal cost involved.
Cottage Industry Services
- Pay Your Rent – In this situation a company offers to make timely rent payments. They will do a direct withdrawal from your bank account and pay your landlord. This assures you of timely payments as well as proof that you have made your payment on time.
- Payment Reporting – In this scenario a company will send notice to FICO that you have made your payment on time. FICO is a financial information gathering service which disseminates your credit information to the three major reporting agencies: Experian, Equifax, and TransUnion. This will assure that your credit score remains in good standing.
More than ever, consumers are becoming more informed about the importance of credit scores. For those that don’t know, The Fair Credit Reporting Act was established in 1970. This law regulates the collection, dissemination, and use of consumer information. More recently, The Fair and Accurate Credit Transactions Act of 2003 made it law that all American citizens could receive a free copy of their Credit Report once every 12 months.
Online Credit Report
A credit report is a mere number which determines the credibility and authenticity of an individual or company based on their previous monetary transactions. It also keeps a tab of all the delay in payments and bankruptcies. This helps all the money lending organisations filter out the defaulters from genuinely interested men. However, in order to view a detailed report, one has to visit the Federal Trade commission. But this is not feasible at all circumstances. Besides, if there are any discrepancies in the credit report, one needs to approach the particular institution which has given the wrong feedback.
The latter has much more diverse impact and will definitely take the life out of the individual before he can convince the FTC to rectify the error. The process takes around 2 to 3 months and starts off with the initial paper work. One needs to be very persistent in sending the letters to the FTC explaining the error and the reason it was caused. However if you do not possess any hard proof and documents, your request will be not taken into consideration. After the submission of letters, the CRA takes a considerable amount of time to verify the authenticity of the complaint and cross references several instances to ensure its accuracy. Following this, the CRA then prepares a revised edition of the individual’s credit report and sends a copy of it to both the borrower involved and his corresponding lender. However, if the CRA is not satisfied with the argument provided by the petitioner, then the application is rejected immediately. But the person involved can still argue it out at the agency through a
center named Credit Info Center.
Know Thy Credit Report
If you value your financial health, watch out for your credit history.
Your credit report contains information about how you handle money – how responsible you are with it – and you will be judged by your actions. Banks, mortgage companies, lenders and even many stores will judge your ability and likelihood to repay your obligations in a timely manner; they will make a snap judgment based on your credit report.
Smile.
No, that won’t work. Your credit report will not contain a smile or a picture of your home or of your family. Just the cold, hard facts.
Perhaps you might not think this is entirely fair, but your credit history is becoming crucially important for your ability to do the things you want to do, for your ability to buy the things you want to buy and go the places you want to go.
Never mind the past – a watchful eye on your credit report might prove even more critical for future financial decisions. Watching your own credit is vital since it provides you with a way to keep tabs on what lenders, landlords and insurers see about you and therefore how they will treat you. Make sure that you look though your credit history regularly; it is even possible to obtain your credit history for free.
Make Yourself Attractive to Lenders
Your credit history will be called up whenever you need to apply for a loan. What the record says will determine whether you get the loan – and the car, house, boat, mattress or whatever you are buying. Even if you are approved for the loan, nobody will give you the most desirable credit terms without good credit.
In other words, with bad credit, you might get the mattress, but you’ll have to pay for the boat.