Credit Bureau Basics

In today’s real estate market, it is more difficult than ever to qualify for a home loan.  With foreclosures rising, your credit score needs to be good, if not stellar, for lenders to say “yes”. 

Still, most American’s don’t understand even the basics of A Credit Report or what exactly a credit bureau is.  Even seasoned investors find themselves overwhelmed in today’s changing market

This brings us to the most basic credit question of all.  What exactly is a credit bureau?

Basically, a credit bureau is a giant record keeper that stores information on almost every adult in the United States.  Information includes addresses, employment and most importantly, payment history.

Some people think that when something on Their Credit Report is incorrect, the credit bureau is at fault. Many times, a lender will hear the statement “Equifax isn’t reporting my car correctly”.

This isn’t true!  Your lender is the one reporting incorrectly.

The credit bureaus collect data, but they do not verify anything.  What they report is simply the information 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 accurate.

It is estimated that between 40 and 70% of Credit Reports contain errors.  These errors can lead to increased interest rates, credit denial and even job rejection.

Since without your involvement, your credit report is simply a big compilation of unverified information, the federal government has numerous consumer protection laws in place.

The most important of these to understand is that the only time the information in your credit bureau is confirmed is if you file a dispute with each of the three credit bureaus.

When this happens, the creditor has 30 days to substantiate to the credit bureau that the item is accurate.  If they fail to verify the item as accurate within this time frame, the item is required by law to be removed from your credit 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.

About the Author

Wendy Polisi is co-founder and Vice President of Finance the Dream. Finance the Dream helps people nationwide achieve the dream of homeownership, even if their credit is poor. They offer Lease Option, Lease Purchase, Rent to Own and Owner Financed homes throughout the United States. A key component of the Finance the Dream program is Credit Repair. For more information on their program or on credit repair, please visit: http://www.financethedream.com

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