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Home::Advice

Free Credit Reports May be Hazardous to Your Credit Score

Author : Tad MacPherson - yourcreditcures.com

The Fair and Accurate Credit Transactions Act (FACTA) of 2003
made sweeping changes to the Fair Credit Reporting Act (FCRA).
On the surface some of these changes seemed like a win for
consumers. Take the ANNUAL FREE CREDIT REPORT clause for
example. Wow! The Credit Bureaus are actually giving away free
credit reports! What a deal! Big win for us consumers, right?
Wrong.

If something looks to good to be true it usually is. Your free
credit report is anything but free. The fee in this case is
time. In exchange for consumers receiving a free credit report
the credit bureaus receive an additional fifteen days (for a
total of forty-five days) in which to investigate disputes
derived from these reports. In contrast, if you obtain a credit
report from your loan agent or for a fee online or even for free
through a promotion and you dispute an item the bureaus are
bound by the thirty day deadline to verify or delete the item in
question.

You must remember what drives the credit reporting
agencies...profits. And where are these profits derived from?
They are derived from the credit industry. And how does the
credit industry make money? By charging you interest. And what
leads to them receiving higher rates of interest and therefore
bigger profits? I think you may get the picture by now. This new
legislation is a trade-off and the bureaus and credit industry
are getting the Lion's share of the benefit. Think about it for
a second. The thirty day deadline to investigate disputes puts a
great deal of pressure on the system. The second the consumer
dispute hits their desk the clock starts ticking. They must
contact the creditor or creditors, inform them of the disputed
information and receive a response within the thirty day period
or by law the item must be deleted. By increasing the deadline
by 33% would it be safe to assume that a comparable percentage
of disputed items that would otherwise have been deleted will
remain on the consumer credit report? Yes.

When you consider that millions of derogatory items are disputed
on a monthly basis it is probably safe to assume that with this
new legislation millions of items that would otherwise be
removed from the bureaus will now remain. One late payment on
your credit report could mean the difference between an A paper
loan and a Sub-Prime loan. Depending on the situation this could
equate to hundreds and sometimes over a thousand dollars per
month in the form of an increased mortgage payment. If you move
and happen to overlook a utility bill from your previous
residence, cancel Christmas. Your credit score could plummet
fifty to one hundred points from this simple mistake. And guess
what, according to the bureaus you are stuck with the wreckage
for seven years.

I am not some anti-government, anti-credit industry nut out to
overhaul the system. So if you are a banking industry executive
or FTC official please take note. In the grand
scheme the system provides stability and security for our
economy. There is no denying this. However, and this is a big
however, the system is oppressive to consumers in its current
state. Should someone be penalized thousands of dollars in
increased interest for seven years because of an inadvertent
mistake? I think not. Should the loss of a job, identity theft,
an injury or the death of someone dear result in seven to ten
years of oppressive discrimination? In my opinion it should not.
Life happens and good people should not be made to suffer for a
decade because of it. If you see legislation promoting the
reduction of the time derogatory credit may be reported, support
it.

Your right to dispute derogatory credit is the only edge you
have in this big game. If you are serious about your credit
rating you must adopt a proactive approach to maintaining it or
improving it. Credit monitoring is a step in the right direction
and usually comes with a free all bureau credit report and
score. Remember, requesting your annual free credit report from
the bureaus may put you at a disadvantage when it comes time to
clean up your report.

Copyright November 2005, yourcreditcures.com, USA Tad
MacPherson is a credit specialist with years of experience
assisting consumers with repairing, restoring and reestablishing
their credit. Get free advice and valuable credit tools at
www.yourcreditcures.com .

ATTENTION Ezine Editors/Site Owners Feel free to reprint this
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