POSTED TO MYCOLLECTOR.COM by ROBERT PAISOLA
One thing that definitely befuddles many consumers is the credit-scoring system.
And things got a little more confusing when the three major credit bureaus -- Equifax, TransUnion and Experian -- recently announced they had joined together and created their own branded creditscoring model, which they hope will replace FICO, the one now widely used by lenders.
Right after the announcement, my e-mail in box began filling up with questions from readers about credit scoring.
The FICO credit-scoring system, developed by Fair Isaac Corp., rates consumers on a scale of 300 to 850. The VantageScore system created by the credit bureaus uses a scale that ranges from 501 to 990. The bureaus' version is supposed to approximate a letter-grade system. Scores of 901 to 990 would be the equivalent of an A; 801 to 900 a B; 701 to 800 a C; 601 to 700 a D; and 501 to 600 an F.
"It appears now that someone with a credit score of, say, 800 under the current system, certainly top of the line, since 850 is the current ceiling, would move from a top rating to average under the new system," one reader wrote.
That's an incorrect conclusion. The two systems are not being merged. High scores under the FICO model remain high. It is more likely that if you have credit scores in the 800s under FICO, you'll score in the 900s in the VantageScore system, assuming the bureaus use the same or similar factors to determine people's credit worthiness.
The announcement about VantageScore also gave folks a chance to vent about errors in their credit files.
"Suppose a credit bureau reports information that is incorrect. Why wouldn't this be legally actionable? Why can't I sue?"
Actually you can. Under the federal Fair Credit Reporting Act, the credit bureaus and businesses that supply them with data are obligated to correct inaccurate information. The act is supposed to ensure the accuracy of information contained in your credit files maintained by the credit bureaus.Correcting errors on your credit report can be maddening.
The problem is that in trying to verify information, the bureaus simply go back to the source. And guess what the creditors often do? They simply confirm the incorrect information in their databases.
If you find an error in any of your credit reports, the Federal Trade Commission says you should write to each agency requesting a deletion or correction. Your letter should clearly identify each item in your report that you dispute. You should also enclose a copy of your report with the items in question circled. Include copies (not originals) of documents that support your position. And finally, send your letter by certified mail, return receipt requested, so you can prove that the credit bureau received the information. Also, keep records of everything and everyone with whom you talk.
But before you do all that, contact the creditor that supplied the incorrect data. You have to attack the erroneous information at the source. If you can clear it up with your creditor first, you have a better chance that the error won't be transmitted again.
The law requires credit agencies to investigate disputed information and correct inaccuracies within 30 days of hearing from a consumer.
If you don't get satisfactory action from the credit bureau or creditor, you have at least two recourses. You can complain to the FTC. Unfortunately, the commission doesn't get involved in resolving individual consumer problems. However, your complaint might lead to some law enforcement action.
Your second option is to file a lawsuit. You can sue in state or federal court. In some cases, you may have more rights under state law. For more information, contact your state or local consumer protection agency or your state attorney general's office.
These types of cases are not easy to win but if you have a particularly egregious situation, go for it. To find a lawyer, try the National Association of Consumer Advocates. Their Web site, www.naca.net, lists consumer lawyers by state.
Finally, those of you with great credit scores -- 720 or higher -- stop obsessing. You don't need a perfect score to get the best credit offers.
Whatever credit-scoring systems lenders use, continue to question what you don't understand. After all, your scores directly translate into real dollars.
ABOUT YOUR MODERATOR:
Robert Paisola is driven by a passion for people motivating them to reach their top potential and has been the director of Many International Corporations, Robert trains sales and marketing professionals who want to strive to get to the top...and stay there.
His innovative, no-nonsense approach is based on applying what he has observedin his fifteen-plus years in sales, motivational speaking andtraining,thus revealing the common business habits of the top 20% of salesperformers in all organizations.Robert's approach works...that's why New York-based Success Magazine has rated Robert Paisola as one of the top-five most effective sales-training professional in the market today. Routinely Distinguished by The NationalSpeakers Forum, Robert is also a regular contributor to Business Week Magazine, CNN, CNNFN, XM Satellite Radio, The Wall Street Journal,Telemundo International, National Public Radio and many other organizations. For more information on Robert Paisola’s unique training programs, contact Robert at Western Capital at robert.paisola@mycollector.com or at 1-877-517-9555 or visit Robert's Media Access site located at: http://www.expertclick.com/19-2637
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