The Truth About Credit Rating Repair

The Truth About Credit Rating Repair

Article by Terry Edwards

Your credit rating is determined by a number of factors including your payment history, debt to income ratio, and length of credit history. All of these factors and others are considered when calculating your overall credit rating. A good credit score can save you a bundle on interest payments.

Contrary to popular belief, credit ratings are not set in stone and they can be altered or repaired in your benefit. In fact, by law, consumers are allowed to inspect and review their credit reports in search of errors. The manner in which credit ratings are determined is highly imperfect and this leads to frequently erroneous reporting.

The credit bureaus responsible for credit ratings are by and large run in the interests of their big business customers. This means that the methodology employed in determining credit ratings is biased towards the needs of business and not in the interest of the consumer. In some ways, the credit rating system is deliberately imperfect and is designed to facilitate high interest rate.

The credit bureaus are able to do this because they know the average consumer will never investigate their credit rating. Most consumers believe their credit rating is primarily determined by their payment history. In reality payment history only makes up a small percentage of the criteria used in determining your credit rating.

Before you begin to repair your credit, you need to review your credit rating and know what your credit score actually is. To review your credit rating and score you will need to purchase copies of your credit report from the three major credit reporting bureaus: Equifax, TransUnion, and Experian. Though it will take a lot of effort you absolutely can repair your rating yourself. Credit rating repair by now has become big business and when you are doing research online you will inevitably be bombarded by wide variety of credit repair options.

Some online businesses offer to repair your credit by creating an entirely new credit profile. Building a new credit profile will certainly repair your credit rating but it is also an illegal practice and can easily land you into hot water. New credit profiles are illegal because they usually involve the theft of someone else’s identity. In order to understand your rights with respect to the credit bureaus you should familiarize yourself with the Fair Credit Reporting Act. This Act limits the abilities of credit bureaus to adversely report on your credit and can help you determine if there are any errors on your credit.

If you really look closely at your credit rating you should have no problems uncovering errors. Remember that these reports were meant to help big business, not you. While credit rating repair can be a bit tedious, it can be well worth it in the long run.