Next year, lenders will have to tell consumers if they’ve been subjected to “risk-based pricing” when getting less than favorable terms on a loan.
Because the majority of credit reports do contain errors, this regulation could have the effect of enabling consumers to dispute the errors that harm their scores, and thus re-negotiate the loan in question.
Mistakes on credit reports can run the gamut from bills being listed as having late payments when the account has always been in good standing, to accounts being attributed to the entirely wrong consumer. The report could also show account balances for bills that have been paid in full.
That’s why it’s so important for consumers to regularly review their own credit reports and check for inaccuracies.
When you think how easy it is to hit the wrong key when you’re entering your own data at home, you can see how easy it would be for a worker who has been at it for several hours. All it takes is one wrong digit in a social security number to put someone else’s information on your credit report.
Consumers who do watch their credit reports have another advantage. They can spot signs of identity theft before a thief has time to do serious damage. Identity theft has become big business, and it’s expected to get worse as the economy gets worse.
The new rules will give lenders the option of providing their customers with a free copy of their credit score and an explanation of what it means, but don’t count on them to do so. In some instances lenders would prefer that you didn’t know your score – particularly if it’s a good one.
If you’ve checked for errors and gone through the steps to see that your report is accurate, but your scores still aren’t as high as you want, there are steps to take.
The first is, of course, to pay all your bills on time. Next look at your credit card accounts. If you owe 80% of the limit on one but zero on another, move your balances around to keep every card under 30%. Then, pay down the balances.
You can also ask for a credit line increase. This isn’t for the purpose of charging more, but to show that you have more credit than you use.
Meanwhile, don’t apply for credit unless you are positive that you both want and need it. Some reports indicate that every lender inquiry on your credit report will bring your score down 5 points.
Author: Mike Clover
CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.
