Essential Credit Bureau Knowledge
In today’s real estate market, it is more difficult than ever to qualify for a home loan. With delinquencies rising, your credit score needs to be good, if not stellar, for lenders to say yes.
Still, very few people understand credit basics. Even people who have owned multiple homes do not understand exactly how credit works.
First, we will answer the most basic question of all. What precisely is a credit bureau?
A credit bureau is a large database that keeps information on most adults in the United States. The information they store includes payment history, addresses and employment history.
Many people believe that when they find inaccurate information in their credit files that the credit bureau is to blame. Often, you will hear the statement Trans Union is not reporting my mortgage accurately.
This is not true! Your lender is the one reporting inaccurately.
The credit bureaus gather data, but they do not verify anything. What they report is simply the data that creditors supply them with. This means that a creditor can report anything to the credit bureau and it will appear on your report, regardless of whether it is true.
People across the United States find false information in their credit bureaus every year. The damages caused by these errors can range from paying higher interest, credit denial and lost employment opportunities.
Fortunately, the federal government recognizes that without your participation, your credit file is a collection of unverified information.
It is imperative that you understand that the only time information in your credit file is verified in any why is if you file a dispute with the credit bureaus.
When a credit dispute is filed, it is up to the lender to prove that the item they are reporting is accurate within 30 days. If they do not do this, the credit bureau is required by law to delete the information from your report.
One of the most important keys to keeping your credit score up is consistent monitoring of your report. There are many great services to help make this easy, but the most important key is consumer knowledge and involvement.
