It was early in the decade circa 2001 when a research paper commissioned by the FTC revealed a very startling discovery about the health of the credit report system in the US. In addition to finding that the credit score of most American were slowly deteriorating, it also found that a large portion of the credit reports had errors in them. There errors were long standing and weren't known by the individuals which the credit reports represent. The report estimated that out of the entire population of US citizens that had a credit history, some 10% of them had errors in the credit reports that they did not know about. The research paper also indicated that almost all of these errors in the credit report negatively impacted the credit score of the individual. The majority of errors were caused by credit reporting entities that weren't careful with submitting names and ID numbers to the credit bureaus. The main problem is that individuals had no way of knowing that they were having invalid entries posted to their credit report. The only way they would find out if when they apply for a loan and they either get an incredibly high rate for their loan or are flat out denied.
Most if not all lenders use a risk-based pricing model for their products. This means that if you are a high risk client, you will be charged for the added bad credit risk that you pose to the lender. If you are a low-risk client then you will be rewarded with rates that are good. From this you can see how having a credit report that does not correctly represent your risk can be very harmful to your ability to get a loan and also harm you by the lenders charging you more than the norm.
A significant amount of weight is put on the credit report to determine if you are a risky customer. For some lenders it is the only factor which defines the rates chargeable to you and if you are eligible to be given a loan at all. Naturally if your credit report was biased and provided information that did not properly represent the real risk that you posed as a borrower, you will be at the very least get a raw deal. It was discovered that as many as 10% of the population had junk entries in their credit report that negatively affected their score. This means that at least 10% of the population would either be paying too much for their loans or have been mistakenly rejected.
In the face of this huge problem, the US congress passed the Fair and Accurate Credit Transaction Act sometime in the beginning of 2003. Along with a few other housekeeping regulations for transparency the act called for two important things to help individuals have a more transparent view of changes in their credit report. The first thing that was done was to allow individuals to get a free copy of their credit report from each of the credit bureaus. Since there are 3 credit bureaus, individuals can get up o 3 copies free every year. The act also calls for a notification system where if changes were to be made to an individual's credit report, that the said individual will get a notice of it.
Responding to this major problem, the US congress sat down in 2003 and passed the Fair and Accurate Credit Transaction Act. Along with a few other regulations to maintain transparency the gist of the act was first to allow for free credit reports from each of the credit reporting bureaus annually. Since there are 3 credit bureaus, you can basically get 3 credit reports free per year so you can monitor your credit report more closely. The act also called for a notification system by credit reporting agencies to inform individuals that negative comments were being added to their credit report. This is to ensure that every comment in the credit report is made known to the individual so they can at least take action to correct it if it is a mistake immediately.
The only problem with this act was its implementation. It took a total of about 7 years to get all the elements of this act in place and regulations to be finalized by the FTC. There is no doubt that the failure to get this regulation done promptly has a part to play in the recent credit fallout. It would seem that after the disaster some top cats are trying to put things right and have rushed this regulation through to the public. There are too many speculations as to why the FTC took so long to work on the act but instead of pointing fingers lets see what the newly implemented regulations mean to us.
For most of us, we already know of the free credit report part of the act. It came online a couple of years back. It basically allows us access to the same report that any creditor would have up to 3 times a year. Of more interest would be the new notification system for changes in our credit report. The exact system of how and when reporting entities have to inform the owners of the credit report isn't certain but you can be sure it will be something along the lines of SMS, phone or even registered mail notifications. To be sure, compile a list of all organizations that can report to the credit bureaus and call them regarding what they will implement to comply with the new FTC ruling.
Most of us already use the free credit reports that are made available to us. This part of the act came online a couple of years back. Each credit bureau has to give an individual a free copy of their credit report annually. This means that average individual can get a copy of their credit report 3 times a year, one from each of the credit bureaus. The FTC has also made credit notice reporting mandatory for credit reporting agencies as of this year. You will find that lenders and organization that make changes to your credit score will be phasing in new systems to report of inclusions in your credit report. This might be through SMS, telephone or even a card on registered mail.
It has been a long time coming with this reporting facility. It is hoped that with its implementation that instances of people being overcharged for their loans and also erroneous loan declines will be settled. Since this new facility promises to help us in keeping our credit reports correct, it is up to us to make full use of it. We recommend that you contact your bank or any other business that reports to the credit bureaus and ask them how they will inform you of their reports. Each business will have a different way of dealing with the regulation and it is up to you to find out how the regulation best serves you. - 29904
Most if not all lenders use a risk-based pricing model for their products. This means that if you are a high risk client, you will be charged for the added bad credit risk that you pose to the lender. If you are a low-risk client then you will be rewarded with rates that are good. From this you can see how having a credit report that does not correctly represent your risk can be very harmful to your ability to get a loan and also harm you by the lenders charging you more than the norm.
A significant amount of weight is put on the credit report to determine if you are a risky customer. For some lenders it is the only factor which defines the rates chargeable to you and if you are eligible to be given a loan at all. Naturally if your credit report was biased and provided information that did not properly represent the real risk that you posed as a borrower, you will be at the very least get a raw deal. It was discovered that as many as 10% of the population had junk entries in their credit report that negatively affected their score. This means that at least 10% of the population would either be paying too much for their loans or have been mistakenly rejected.
In the face of this huge problem, the US congress passed the Fair and Accurate Credit Transaction Act sometime in the beginning of 2003. Along with a few other housekeeping regulations for transparency the act called for two important things to help individuals have a more transparent view of changes in their credit report. The first thing that was done was to allow individuals to get a free copy of their credit report from each of the credit bureaus. Since there are 3 credit bureaus, individuals can get up o 3 copies free every year. The act also calls for a notification system where if changes were to be made to an individual's credit report, that the said individual will get a notice of it.
Responding to this major problem, the US congress sat down in 2003 and passed the Fair and Accurate Credit Transaction Act. Along with a few other regulations to maintain transparency the gist of the act was first to allow for free credit reports from each of the credit reporting bureaus annually. Since there are 3 credit bureaus, you can basically get 3 credit reports free per year so you can monitor your credit report more closely. The act also called for a notification system by credit reporting agencies to inform individuals that negative comments were being added to their credit report. This is to ensure that every comment in the credit report is made known to the individual so they can at least take action to correct it if it is a mistake immediately.
The only problem with this act was its implementation. It took a total of about 7 years to get all the elements of this act in place and regulations to be finalized by the FTC. There is no doubt that the failure to get this regulation done promptly has a part to play in the recent credit fallout. It would seem that after the disaster some top cats are trying to put things right and have rushed this regulation through to the public. There are too many speculations as to why the FTC took so long to work on the act but instead of pointing fingers lets see what the newly implemented regulations mean to us.
For most of us, we already know of the free credit report part of the act. It came online a couple of years back. It basically allows us access to the same report that any creditor would have up to 3 times a year. Of more interest would be the new notification system for changes in our credit report. The exact system of how and when reporting entities have to inform the owners of the credit report isn't certain but you can be sure it will be something along the lines of SMS, phone or even registered mail notifications. To be sure, compile a list of all organizations that can report to the credit bureaus and call them regarding what they will implement to comply with the new FTC ruling.
Most of us already use the free credit reports that are made available to us. This part of the act came online a couple of years back. Each credit bureau has to give an individual a free copy of their credit report annually. This means that average individual can get a copy of their credit report 3 times a year, one from each of the credit bureaus. The FTC has also made credit notice reporting mandatory for credit reporting agencies as of this year. You will find that lenders and organization that make changes to your credit score will be phasing in new systems to report of inclusions in your credit report. This might be through SMS, telephone or even a card on registered mail.
It has been a long time coming with this reporting facility. It is hoped that with its implementation that instances of people being overcharged for their loans and also erroneous loan declines will be settled. Since this new facility promises to help us in keeping our credit reports correct, it is up to us to make full use of it. We recommend that you contact your bank or any other business that reports to the credit bureaus and ask them how they will inform you of their reports. Each business will have a different way of dealing with the regulation and it is up to you to find out how the regulation best serves you. - 29904
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Be ready to face the Fair and Accurate Credit Transactions Act with us at http://www.creditrelease.com. Have a look at how this new ruling impacts you and how you stand to benefit from it.
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