Purchasing real esate is one of the prirmary reasons the consumer should make sure the credit score does not contain errors. A difference of 1 % between a 5.5% loan and a 6.5% loan is $128.56 a month. At 5.5%, payments principal and interest are $1135.57 and and 6.5%, $1264.13 a month, Over a 30 year loan, this totals $46,283…that is a lot of money!
When information on a credit report is inaccurate, it should be corrected by the consumer as soon as possible. The consumer can correct and request deletion of information. The Federal Trade Commission has a web page devoted to credit report including a brief online video. According to the FTC, check the credit report annually
“Because the information in your credit report is used to evaluate your applications for credit, insurance, employment, and renting a home, you should be sure the information is accurate and up-to-date. In addition, monitoring your credit is one of the best ways to spot identity theft. Check your credit report at least once a year to correct errors and detect unauthorized activity.”
The site provides information on what to do, how to request information. and how to dispute and correct the credit report mistakes. This should be done by the consumer, turning the problem over to a credit counseling agency costs money and may not rectify the inaccuracies.
Writing letters to each of the credit agencies detailing the inaccuracies and requesting an investigation into the problem is preferable. The consumer should include name, address, social security number, spouse’s name, previous addresses for the last five years, and phone number and request a corrected copy of the credit report.
According to Patrick Ritchie, “42% of the credit problems are medically related”. Many people put medical costs onto credit cards or are reported as delinquent by medical professinals including hospitals because of disputes between medical providers and insurance companies. The consumer may believe bills have been paid, but the insurance company has not anted up and the debt is outstanding. Even when the debt is paid, the provider often does not contact the credit reporting agencies to correct the inaccurate report.
Parents often co sign for their children. The purpose of co signing should be a red flag; this person cannot get the credit requested on his/her own. Real Estate agents see this situation all to frequently when people wanting to purchase a property cannot do so because they have co signed for a friend or relative who did has not meet the debt obligation. In many instances, the would be purchaser of a home had stellar credit which was decimated by the friend or relative defaulted and had no idea of the default until the credit report was pulled for loan information.
Divorce can bring credit issues as well. Each spouse should insist his/her name is removed from all joint credit accounts and new cards established in each individual’s name. Any joint debt should be resolved if possible, prior to the dissolution of the marriage. Debt holders can go after either party, and people contemplating divorce are trying to build a new life which can be difficult with derogatories on credit reports. Credit card companies are not bound by the terms and conditions of a divorce decree.
Credit is a necessity of life in today’s world. We need it to rent a car, sign up for cable, rent or buy a place to live. Credit is also a convenience, it is the roadway to lower interest rates, and it should be managed carefully and protected like gold.
Resources:
The Federal Trade Commisison: http://www.ftc.gov/freereports
Patrick Ritchie http://www.TheCreditRoadMap.com
About credit cards and divorce: http://www.creditcards.com/credit-card-news/dividing-credit-card-debt-divorce-1282.php
Equifax Credit Information Services, Inc. http://www.equifax.com
P O Box 740256 Atlanta, GA 30374 -0241 (800) 685-1111
Trans Union Corporation http://www.tuc.com
P O Box 2000 Chester, PA 19022 (800) 916-8800
Experian Http://www.experian.com
P O Box 2104 Allen, TX 75013 (888) 397-3742
