The Consumer Data Industry Association (the representative body for credit reference agencies) claimed that 3% of all credit reports contain inaccurate information. However, other consumer groups have stated that the figure is far higher - up to 25%. Whilst it is possible to debate how many reports contain inaccuracies, there is no doubting the fact that fixing credit report errors is critical prior to making an application for credit. A low credit score will not be interpreted favorably by mainstream lenders.
Correcting Credit Report Errors
Inaccurate data equates to the same thing as missed and late payments in the eyes of creditors and will lead to an application for credit being rejected. They aren't going to question whether a potential customer is really bankrupt or has the correct social security number, they will reject the loan and move on to someone else. Fortunately, by going through the correct channels, the Fair Credit Reporting Act gives a consumer the right to correct any inaccurate information that is held about them. Although it isn't a quick process, it represents the fastest source of credit repair.
Rectify Credit Report Errors to Prevent a Low Credit Score
Correcting inaccurate data will take up to 6 months so it is not something that can be done over the phone the day before applying for credit. The consumer needs to write to the credit reference agency (Experian, Equifax and TransUnion) and not the creditor. The exception to this rule is credit cards where the card provider can be contacted directly. Comprehensive supporting information must be included or the issue won't be resolved. The Consumer Data Industry Association claim that 55% to 60% of consumers failed to provide supporting information.
Credit Repair Attorney Vs Personal Credit Repair
The individual can improve a low credit score by following the procedures or hiring the services of a credit repair attorney. There is a lot that can go wrong with credit repair, but paying about $30 a month for the services of a professional will help to minimise risk. The attorney will monitor the client's credit and application history to ensure that any issues are resolved as expediently as possible.
Preventing a Low Credit Score
Eliminating credit report errors is a fundamental part of the credit repair process. Whilst it can be financially impractical to hire a credit repair attorney for many people, doing so will help to rectify issues as quickly as possible. Removing inaccurate data is a time consuming process so the correction process must be started at least six months prior to applying for credit.
Sources
Tedeschi, Bob (2009, April). "Faulting Credit Firms on Fixing Errors." The New York Times.
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
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