Who are they?
There may be several small credit reporting businesses in your area, but the ones that they all report to are the “Big Three”, which are:
What do they do?
Basically, they are information brokers. The “Big Three” Collect data from thousands of sources. They maintain credit files on everyone who has ever purchased anything on credit. They then sell purchasing and payment history information to just abount anyone who wants to buy it. This is a lot of information to process properly.
Are they governed by law?
Indeed they are. The Fair Credit Reporting Act (FCRA) is the federal law that governs how credit information is collected, distributed, reported and corrected in case of errors. You are entitled to a free copy of the law from any Federal Trade Commission office.
How accurate are they?
Let’s See …, 3 credit reporting agencies, employing thousands of data entry clerks, entering billions of items of credit data. Personal data as well as credit and public record information. Obviously, with all of this going on there is tremendous margin for error.
What is a Credit Score
Credit scores, also referred to as FICO scores are based on the information in your credi report. Over the last twenty years, increasingly sophisticated models have been developed to calculate scores. These models have been built using a sampling of many consumers to determine which areas of the credit report are most indivative of credit risk. Entering the information from your credit report into these models produces your credit score. There are many types of models used currently for ‘credit’ scores, as well as other models for such areas as ‘insurance’ scores. All scores, however, are based on the information in your credit report, and reflect similar degrees of risk.
Credit scores where designed for convenience. Many lending institutions no longer look over your entire credit report, they merely place your score within their pre-determined ranges to see in which credit-risk profile you likely fit. In this fast-paced age with an overabundance of information, filtering and screening that information is essential to make timely decisions. Credit score models filter the information on your credit report and produce one number, which those institutions that have pulled your credit report look to first. For this reason, the utmost care should be taken to ensure an optimized score.
In layman’s terms: One of the most important concepts to remember about credit scoring is that basically, it is a daily battle between the negative items on your credit report and the positive items. When you utilize our service what occurs is when we remove the negative items then the positive trade lines gain “power and momentum” to escalate the score. This adjustment is made immediately. How high a score can go depends on the individual’s own credit report. When you sign-up with our service we send you a letter that will inform you that the process is underway, each time we begin the disputation process, along with proven tips in how to establish and maintain a good credit or FICO score.