Having a good credit score is important for those who may need to borrow money to buy a home or car. The way a person's score is measured is by how well they do at borrowing money and keeping accounts current.
Other factors include cash on hand and income so as to figure one's debt-to-income ratio. Debt-to-income (DTI) compares how much a person is obligated to pay creditors by way of minimum payments to how much is being taken home each month. A person making $2,000 who has a $600 mortgage payment and a $150 car payment has a DTI of $750:$2,000, or 37.5%.
The biggest thing that hurts many credit scores, though, is discrepancies. When an account a person never had, or had already paid off, is said to be in default or collections, excellent credit scores over 700 can plummet below 600 into a status that will make lending less desirable. For this reason, it is very important to get a free credit report online.
Don't be Duped by Credit Score Companies Claiming to be Free
There is nothing wrong with paying for a credit report, but by law everyone is entitled to their credit scores once a year for free through AnnualCreditReport.com.
For those who have seen commercials for FreeCreditReport.com, this reporter has tried it. They asked for money. Maybe the wrong icons were clicked.
Consumer advocate Clark Howard tells viewers and radio listeners to avoid this site, but not because it's a bad site; it's just not the place to go for one's entitled free annual credit report.
What to do if Credit Score has Already Been Checked
For those who have already received their free annual credit report but want to check it again to make sure it is accurate, the next alternative is to purchase a credit report. This can be done for less than $30 and quite easily through a variety of available sites that offer this service.
This may be necessary for those who have spotted discrepancies and do not trust the reporting agency to correct it in a timely manner.
How to fix a Discrepancy on a Credit Report
When a discrepancy is found on a credit report, whether it's due to negligence by the lender or fraud, the credit reporting agency needs to receive a letter by Certified Mail with a Return Receipt citing the discrepancies and containing the following statement:
"According to the Federal Fair Credit Reporting Act, you have 30 days to remove this from my bureau. If not I'll be forced to take legal action for defamation of character."
The reason defamation is accurate is because when the reporting agency publishes something about a person that is not true while also damaging his or her reputation, it constitutes libel.
Getting a free credit score report online is not only a consumer right, but it should be thought of as a responsibility. After all, no one is going to care about anyone's credit score more than themselves. And when there is a discrepancy found when money is needed, it cannot be borrowed, which is why diligence is so important when it comes to this easy and affordable fiscal task.
Join the Conversation