Know Your Credit

I was sitting around this weekend, and as I often do, I check my credit reports. I try to examine my credit reports at least once a month; that seems like a lot and probably is for the average consumer. But for me my credit standing is vital for my business and its success.

I am probably not the best person to talk to about credit, or at least the credit bureaus; since I believe the credit bureaus are the biggest scam of all. I mean they give you one free credit report a year so you can see what’s on it, but that only happened after they were forced to do so.

I pay for credit report monitoring and, unfortunately, I suggest you do the same. Be assured I don’t get paid for recommending this but it’s the only way to really know what is going on with your credit reports. All three bureaus have a monthly service that will send you alerts as things change on your report. You probably don’t need all three just chose one, that way if you get an alert you can check it and then you will know most likely the other two reporting agencies will have the same information.

I have been keeping track of my credit reports for many years, and I literally have a three ring binder for each bureau that is five inches thick full of old reports. I keep very close track of what is on my file. Listen in the last few months I have had several things hit my report that were erroneous. It pays to check.

The first error involved a bank I had a loan with; they said I was 30 days late on a payment which wasn’t even close. I had to actually show them my receipt of the payment to prove I wasn’t. Then I had to diligently stay on top of the bank to make sure that they fixed my credit report. In the last year, I have had at least three or four separate instances where a payment was not recorded correctly.

Here is a good story for you. I had a car that I wanted to trade in. I went to the dealer, bought a new one and traded in the old car. Thirty days latter I received an alert that something had changed on my credit report. I logged in only to discover that I had a 30 day late pay for the first car - the car I traded in! After tracking down all individuals involved I came to find out that the car dealership didn't pay off the first loan. Can you imagine that!? Apparently this is going on far more than one would imagine. Anyway, I finally got the dealership to do what they were supposed to do and, from that point, it took about a month to get my credit report fixed and back on track.

In the past, I have had erroneous inquires, people and organizations pulling my credit that shouldn’t. Each inquiry can affect your credit score so you want to make sure that your credit report isn’t being pulled unnecessarily.

These examples are extremely important and fairly common, especially in today's economic climate. The credit bureaus are very busy right now and lots of people are having issues. With all the reporting going on things are getting messed up more now than ever. That’s why it’s ever so important to stay on top of your report and credit score. If your score goes down you could be paying a lot more for your credit in the future.

The whole credit scoring system is just simply broken. In fact, the FICO scoring system is one of the reasons the whole housing industry is crashing. The credit reporting agencies were supposed to provide a score that helped lenders lend money, but obviously it didn’t work out well for them or for us. In addition, I hear the major banks are in the process of suing the credit reporting agencies because of their scoring systems.

Just recently Experian pulled out of its agreement with myFICO.com, which had been the only place where consumers could buy their FICO scores from all three bureaus.

The FICO scoring system is suppose to be a leading credit scoring formula used by most lenders. Experian will continue selling it to lenders, acting like it's no big deal by not offering it to consumers anymore. In my opinion, it is just another way for the credit reporting agency to keep us in the dark.

Experian spokeswoman Susan Hensen wrote in a recent e-mail, "There is no one credit score that all financial institutions use to make decisions, and there is also no one credit score that consumers must use to help them understand and manage their credit. There are many reputable credit scores on the market that consumers can use to evaluate their creditworthiness before making financial decisions."

Experian Executive Vice President Peg Smith downplayed any disadvantage to consumers, saying Experian will still offer individual customers its own credit rating scoring system.

Yeah, whatever…don’t you believe that for a minute! Bottom line – you should check your credit reports often. It should be illegal for these reporting agencies to hold us hostage; basically extorting us into having to pay so that we can see what is on our credit reports but they do. They pay a lot of money each year to lobbyists to push their agenda on us. So it's time to fight back, write your Senator and your U.S. Representative and tell them it is time to overhaul the Fair Debt Credit Reporting Act.

To learn more you can visit www.JamesDicks.com


As always,

Happy Investing

All my best

James Dicks