Loan Consultant

Today, crimes such as fraud and identity theft have become common. It is very important for people to view their credit reports regularly. This will enable them to take the necessary steps as early as possible to rectify the situation and minimize the consequences.

To obtain an online credit report is much easier nowadays because of the large number of websites that are offering this service. Customers have the option of obtaining a free copy, every twelve months. These websites provide a credit score. A credit score is a grading system that adds or subtracts points based on selected data in the credit report. Negative factors like late payments and bankruptcies take points away whereas a strong credit history and the careful use of available credit, adds points.

There are several reasons why credit scores may vary. Not all financial institutions report to all the three credit bureaus, Experian, TransUnion, and Equifax. A late payment reported by a credit card agency to only one bureau would lower his score on that credit report. Until recently, each credit bureau used its own variant of the standard scoring model and any deviation would end in a different score. The three national bureaus now use the same scoring model.

In 2002, researchers conducted a study to examine the reasons for different scores at the three national credit bureaus. Besides different reporting practices by the lending institutions, the study also found that customers sometimes have multiple or mixed credit reports. This was due to the variations in the names used on credit applications and credit files that include information about more than one customer. If any of the bureaus return a report without scoring it or if it is not possible for the bureau to locate a report for the applicant, the information is recorded.

This entry was posted on Monday, August 9th, 2010 at 1:32 am and is filed under Credit. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.