First things first: credit scores are determined by the information in a credit report. The credit report is only as accurate as the provider of the information that report contains. Any inaccuracies in a credit report can, and will, have an impact on the credit score.
Getting a Score
Depending on how accurate the score needs to be, an estimated credit score can be easily obtained from a number of credit score estimators and widgets. Each of the major credit bureaus (Experian, Equifax, and TransUnion) has such an estimator on its website. Most of these estimators ask about a dozen questions concerning finances and give a ball park credit score useful for the merely curious.
Other Credit Score Calculators:
For formal financial use, however, a “real” or “true” credit score must be used. As stated in previous posts, there is no one “true” score, simply a branded score from one of many companies who use credit reports from these same three credit bureaus to determine a number. FICO is the credit score most often used by lenders and may be the most appropriate to start with. Simply visit myFICO.com.
Checking Credit Reports
The best way to get an accurate credit score is to periodically check the big three credit reports and correct any errors. There is no legal way to remove accurate, negative information from a credit report, but inaccuracies can and should be disputed as soon as possible.
Errors can range from incorrect personal information to information left on the report past its statute of limitations has run out. Errors can also include accounts opened by someone other than the owner of the report, which is a big, red flag for identity theft (another excellent reason for checking these reports).
Put it in writing to create an audit trail. Disputing an error requires other documentation to be presented. Other action can also be taken.
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Provide copies of supporting documents such as receipts and statements.
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Use the official form from the credit reporting agency itself.
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Contact the information provider, such as the lender, about the dispute.
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Identify each disputed item clearly, state why it is in error, and offer documented proof.
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Send by certified mail, “Return Receipt Requested.”
The credit reporting company and the information provider must investigate this claim within 30 days of receipt unless it is considered frivolous. The credit bureau is required to send copies of all documents to the information provider to ensure the provider is aware of the issue and can launch an investigation.
If an inaccuracy is found, the information provider must notify all credit report companies of the error and a free, corrected credit report issued to the one disputing the error.
Improving a Credit Score
If all credit reports are accurate and yet the credit score is low, the only resolution is time and attention to paying debts on time. Information on credit reports remains only for fixed amounts of time, often seven years for consumer reporting companies and ten years for bankruptcy. An unpaid judgment may come with its own date of expiration and can be also be more than seven years.
Regularly checking credit reports, estimating credit scores, and being diligent in correcting errors is the best route to a correct credit score. The best scores go to those who pay their bills on time.
*Image courtesy of FreeDigitalPhotos.net
