Know Your Credit

Who owns the three credit reporting agencies?

• Experian (www.experian.com): Employs more than 15,000 employees and has corporate headquarters in Dublin, Ireland. The company is publicly traded on the London Stock Exchange under the symbol EXPN, and therefore its owners are the holders of the stock.
• Equifax (www.equifax.com): Employs more than 7,000 employees and has its headquarters is in Atlanta, Georgia. The publicly held company is traded on the New York Stock Exchange under the symbol EFX. Its owners are the many holders of the stock.
• Transunion (www.transunion.com): This privately held company employs more than 2,600 employees and is headquartered in Chicago, Illinois. The company is owned by the Marmon Group, which is controlled by the Jay Pritzker family.

What does that all mean? It means they are big businesses and have people working for them that are just as careless and as disinterested in their jobs as some of you and my coworkers and that can work for you if you need to make some repairs.

Since your credit scores are based on the data in your credit reports, it’s incredibly important to make sure all of that information is accurate. If you have a mistake on your credit report, your credit score will reflect that mistake.

The first step to improving your credit score is checking your credit reports. Everyone has three credit reports

• One from each of the 3 major credit bureaus: Experian, Equifax, and TransUnion. Credit reports can, and often do, have mistakes on them. A recent study found that 1 in 5 consumers had an error on at least one of their credit reports, and found that those who reported an unresolved error on one of their reports believe that at least one piece of disputed information is still inaccurate.

If you send a dispute letter about anything being reported, the dispute is forwarded to the agency making the report (credit card co, bank, etc) That agency has thirty days to respond to the credit bureau in writing to verify the information.  No response and the item must be removed from your credit report.  There is no need to spend money on credit repair, just send the letters yourself and see what happens.

It’s easy to check your credit reports from each of the three major credit reporting agencies. You’re entitled to a free copy, once a year, of all three of your credit reports under the Fair Credit Reporting Act. These reports can be accessed via AnnualCreditReport.com, the government-mandated site run by the major bureaus.

Most credit scores – including the FICO score – operate within the range of 300 to 850. The credit tiers generally look like this:

Excellent Credit: 725+

Good Credit: 700-724

Fair Credit: 650-699

Poor Credit: 600-649

Bad Credit: below 600

But with a 580 and above you can still qualify for a mortgage. 

Once you have your credit reports in hand, here’s a quick checklist of questions to ask yourself to help you spot potential errors:

1. Is all of your personal information accurate?
2. Are all of your credit accounts being reported?
3. Are there any late or missed payments listed that you remember making on time?
4. Are there any accounts or applications for credit you don’t recognize?   
5. Are there any items from decades ago still appearing on your report?

The factors the go into a credit score are as follows

1. 35% is your payment history
2. 30% is the Amounts owed in relation to the limit allowed
3. 15% is the length of credit history
4. 10% is New Credit
5. 10% is the types of credit in use.

Keeping all of that in mind, you can make huge changes quickly to your score by paying down on credit cards for example.  I have seen people with cards that have $1000 limits for example and they have $800 charged on them but could easily pay the card off, in many cases they do pay it off completely but then charge right back on it regularly, so the bureau never sees it as being a zero balance. 

If you add an authorized user to an account, the new user will “inherit” the history of that account going back in time to when the account was opened, so a card with a high limit of $10,000 and no balance that has been open for 8 years can drastically improve someone who has had little to no credit prior. 

For more on your credit and handy tips and tricks to save you money, keep your eye on future posts.