….Your Credit Report – Part IV
None of the information provided on the credit bureau websites gives any explanation for how they derive the credit scores they assign. If an individual is attempting to raise their scores in order to get financing to purchase a new home, they have to be psychic or just lucky.
It is extremely frustrating to me that these agencies’ “scoring” influences a vast amount of activities in our daily lives yet there appears to be no accountability for their reporting discrepancies. Over the years it has been my observation that they do not check what is reported to them in the form of derogatory credit. The creditor does not have to prove their claim or prove that you are the correct individual they are reporting.
The creditor simply sends in notice to the bureaus that Mr. Joe United has been late on his car payment for the months of March and April. If this is inaccurate, it’s Mr. Joe United’s responsibility to:
a)find out the derogatory credit has been reported
b)present documentation that he is not the individual in question
c)present documentation that the derogatory credit being reported is wrong
d) follow up with the bureaus until it is removed from his report (which can take months).
My theory is that anyone can slap something derogatory on your credit without proof but it takes an act of Congress to get it removed if it’s wrong. If the credit bureau reporting system is going to be allowed to drive so much of what we are able to do as consumers, then I believe there should be clarity and accountability on the part of the bureaus and the reporting creditors.
If someone ends up with 1.5% higher interest on their home mortgage because of a credit reporting inaccuracy, the costs to that individual are significant. Even over the course of a few months it can mean thousands of dollars over what the individual would be paying if their credit report had been correct.
Creditors nor credit bureaus are held responsible when they make mistakes but, I can assure you, we, as consumers, are definitely paying for them.
What you need to know about your credit report – Part V to follow.