Know Your Credit Reports – Your Credit Scores Will Follow

credit-report

I trust that my regular readers understand that all mortgage lenders in the US rely only on FICO® Scores in credit lending decisions, not FAKO® Scores. In fact, the vast majority of lenders of any stripe rely on FICO® Scores, not FAKO Scores. Lenders do not rely on the scores sold to consumers under various brand names such as those referenced in this partial listing of FAKO Scores: Consumerinfo.com, Creditexpert.com, CreditKeeper.com, Equifax.com,  Experian.com, Quizzle.com, Freecreditreport.com, Free Credit Click, Transunion.com, Truecredit.com, Truelink.com,  Gotcredit.com, Freescoreonline.com, Creditkarma.com, Creditsesame.com, freecreditscore.net  zoomcreditscore.com, et al. To be clear, these scores are for consumer amusement purposes only. The “free scores” are not, in fact, without cost. Many can expect to get junk mail and spam offers for high cost credit cards, mortgages, auto loans and etc. Remember, too, you are providing a great deal of personal information. Be careful out there.

We suggest that one focus far less, if at all, on FAKO credit scores and more on the facts which are reported to the Credit Reporting Agencies (CRAs). It is from these facts that credit scores are derived.  One has no control over the mathematical predictive tools developed by the math scientists at FICO®. We only have control over how we interact with our creditors. Do we pay on time? Do we overextend ourselves?

The details of the information reported hold the keys to your scores. Get your free annual credit report.  Check to see if everything reported is accurate. If not, initiate dispute action(s) to correct the errors. The more one understands what is being reported and how it affects scores, the easier it is to improve credit scores. There are important consumer rights guaranteed by federal consumer financial law, These rights are best preserved by first going through the credit reporting company’s complaint process. If you are still not satisfied, the Consumer Financial Protection Bureau (CFPB) is now accepting consumer complaints against CRA’s. Given this link is not very easy to find, this is the CFPB CRA complaint link.

Those buying credit scores tend to buy this.

Those buying credit scores tend to buy this, too.

The (CFPB) has issued a report and set up a consumer resource center to learn about the scores used by lenders. There are excellent guides and details about almost everything one wants to know about consumer credit on the CFPB site. The CFPB provides a wonderful site for facts presented with little bias. For facts and tip on improving and managing your FICO scores this blog is an excellent resource; all that’s required is the application of the techniques coupled with your discipline to manage your use of credit.

I think the essence of the CFPB report on what I call FAKO Scores is the sellers of these scores are simply taking advantage of consumers every which way possible. Will this be determined to be deceptive or false advertising? Will a disclosure that these are not lending scores suffice for adequate consumer protection? Or will the broad new powers granted the CFBP bring forth an era of strong consumer protection. Will this new protection balance with the borrowing needs of home buyers? Only time will tell.

Image attribution

Financially Speaking™ James Spray, MLOCNE, FICO Pro 
CO LMO 100008715 | NMLS 257365 | December 11, 2012

Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.

2 comments on “Know Your Credit Reports – Your Credit Scores Will Follow

  1. John Barnes says:

    I have a question that I can’t seem to find information about. When a credit account is included in CH 13, how long will the creditor continue to report the account? It would seem that if an account has been included in the filing, it no longer exists after discharge. Are there rules about this?

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    • James Spray says:

      Excellent question, Mr. Barnes. Pursuant to the Fair Credit Reporting Act (FCRA) the creditor must report your credit to the credit reporting agency or agencies for seven years following the derogatory credit event. If you are presently in a Chapter 13 payment plan, the debt has not yet been Discharged, the creditor can continue showing the debt with a balance. However, that debt is likely uncollectable at present except throught the bankruptcy process. The creditor must report the account is in bankruptcy.
      On the other hand, if your Chapter 13 has been Discharged, the creditor must show a 0 balance owing for the time remaining per FCRA as discussed above. If the creditor is showing a balance due following the Discharge, dispute the report. For information on how to dispute, read Credit Repair Basics.
      To calculate when the debt will drop off your report, take the date of last activity and add seven years.
      To get a free annual copy of your credit report go to: AnnualCreditReport.com. Buyer Beware: You need not purchase anything the three credit reporting agencies will try to sell you.
      I wish you success!
      Jim

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