In today’s financial well-being, your credit reports and scores define you, and they are too important to ignore. They determine whether you will be saving money or spending more. The biggest credit reporting companies in the United States are Experian, Equifax, and TransUnion.
These three giants usually get information from their own sources and on things like car and mortgage loans or credit card. And if you have a bad credit score, you need to get it fixed with credit tradelines. That’s why credit reports can have some errors if you haven’t got it repaired. Here are five interesting facts about the credit repair industry.
1. 35% Americans Adult Have A Report of Debt
It’s estimated that almost 77 million Americans i.e. around 35% of the total US population already have a report of debt in collections. It’s estimated that an American has on an average $5,000 in debt i.e. around $5000 multiplied by 77 million Americans, which comes to $385 billion on debt – that’s a whopping figure. Phew!
Debts in collections don’t include car and mortgage alone. They also include a credit card balance, as well as medical utility bills that have over three months due and are already in collections. About 5% of people who have a credit file already have debt or past due on non-mortgage payment.
2. They Always Have Free Annual Report
The most effective way of identifying and correcting errors is by getting your credit report yourself and analyzing it. Some people don’t do that, and when they fail to, errors are left untouched and continue to spoil your credit. If you understand what an error in your credit report means, you know that it’s far worse news than death.
To make it worse, not everyone knows that they have the right to receive an annual report every year. The three credit giants (as mentioned above) allows you to receive the free credit report. It’s necessary to go through your annual report so that you can review your past credit history and plan for future credits and loans.
3. Almost a Quarter Of Disputes Are Related To Collections
You would never want to end there, but circumstances force you to. Some people have found themselves in that situation. According to 2011 statistics, credit report companies received 8 million emails and calls from consumers to solve up to 38 million items in their credit files.
40% of the disputes is debt in collections and are 5 times the disputes culminating to mortgage information. CFPB reports that some of the disputes in collections concern the consumers’ negative information on their credit reports.
4. Large Companies Are The Source of Most Information
You are probably learning this now, but yes, large companies like The Bank of America and hundreds of others give information about credit reports to the three largest credit reporting companies. They are called data furnishers, and they provide 76% of credit report data.
It’s good to know. Right? You probably thought you were the only one responsible for most of your credit information. You can bet you aren’t the only consumer who had the same thought. Large banks and companies are the sources of information, and they really have an impact on many consumers as far as credit report industry is concerned.
5. Five Factors Determine FICO Score
Five factors make up all FICO scores. Those factors consist of
- your payment history
- the amounts you owe to institutions
- your new credits
- the length of your credit history
- and lastly your credit mix.
The last four make about 65% of the FICO score.
Your payment history single-handedly takes about 35% of your FICO score. There is a myth going around that your level of education also contributes to FICO score. Whether you are a school dropout or have a Ph.D. from Harvard, people that calculate your FICO score don’t care.
As we wrap it up, you now know some facts about the credit repair industry. However, you should know that some of the reports aren’t calculated or structured the same. They contain info about the activity and situations about your credit.