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Credit Reports and Credit Reporting Agencies
We all know that our financial transactions are reported to credit agencies that track how well and how quickly we pay our debts and that when we apply for a loan for one reason or another, those agencies report our credit history to prospective...
Different Credit Card Terms
Although everyone knows what a credit card is, recent studies
show that almost thirty per cent of credit card users asked
didn't know the meaning of several terms related to credit cards.
This small glossary aims to reduce this percentage by...
Home Owners Avoiding Complications in Credit Repair
Avoiding complications in credit repair is almost important as
getting out of debt. When we have bills that were neglected
simply because we didn't have the money to pay the bills, or
else we purchased items instead of paying the bills, we are...
How to Find the Best Credit Cards
Finding the best credit cards in today's world can be a bit challenging. Although you may receive hundreds of credit card applications in your mailbox each year, not all of them are worth your time and energy. To find the best credit cards, you...
Why Bad Credit People Pay Higher Rates
Why Bad Credit People Pay Higher Rates by Dave Czach Let's face it. People with credit problems pay higher rates for the same reason people pay higher auto insurance premiums - risk. Virtually everyone knows if you receive a traffic ticket, you get...
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Credit Scoring: What it is, and How It Affects You
If you have applied for a mortgage in the past five years, you’ve probably heard of credit scoring by now. Perhaps you were told that your credit scoring was wonderful, or needed work. Or maybe your mortgage would have been lowered by several points, if you had better credit scoring.
Credit scoring models, as the industry calls them, started to become widely used around 1994. Two secondary market players, Fannie Mae and Freebie Mac, started creating automated underwriting programs around this time, and this is how credit scoring came to be the way it is today. Both auto lenders and credit card issuers have used these types of systems for years – well before the mortgage brokers did.
The aforementioned companies that started to use these processes about 10 years ago now thought it was strange that someone could walk into an auto dealership, and two hours later drive away with a $100,000 car – but a potential homeowner couldn’t do the same thing. Which made no sense, because cars depreciate over time, and can get lost or stolen – but houses usually appreciate, and are fixed in location. So, using this logic, the industry movers and shakers decided that if the car buying process was this easy, then home buying should be as well.
Although in theory this sounds quite amazing, it’s only been recently that this has actually been the reality of the process. This is partially because the credit scoring models have become more refined over the years. And now, almost all mortgages
are determined using some sort of credit scoring process.
These mortgage brokers usually use some sort of credit reporting agency to get information about someone who has applied for financing, or credit scoring, with them. But what most people don’t know is that there are two different kinds of credit reporting agencies whose information determines your credit scoring. The first is the four big credit agencies: Innovax, Equifax, TransUnion and Experian. When a person gets credit, or even applies for credit, this is reported back to these credit agencies, and kept on file indefinitely. Files are updated, usually, on a monthly basis. However, these credit scoring agencies only accept the information as it is given to them; there is no fact checking process to ensure that your credit scoring is accurate.
Credit scoring agencies will also get information on a consumer applying for a mortgage using other sources, such as the Department of Motor Vehicles, the Medical Information Board, the FBI, local law enforcement agencies, county records, government records, and the like. The mortgage industry has a repository of their own for information about people they give credit to, which can be accessed in a pinch if required, so that those who are bad credit risks don’t get a good credit scoring.
About the Author
For more more information about credit scoring please visit http://www.moneytipsdaily.com/Money-Tips/Credit-Abuse-You-May-Be-an-Innocent-Victim-and-Not-Know-It.html
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