Tucked in the dark recesses of every closet are things long forgotten. So it is with your financial life. You may have been late on a rent payment. You may have simply forgotten to pay your HOA, or perhaps, at some point, you didn't fully understand your financial place in this world. There is now a score for that.
Let's back up for a moment and discuss the whole concept of credit. Depending on how you learned this lesson, be it at the front window as your family car was being repossessed or worse, the family home being foreclosed, or perhaps it was that call from a collection agency reminding you that someone had been financially wronged by your failure to pay whomever what they were owed. It may have been at the knee of a parent who suggested that the real threshold to adulthood came with credit, the willingness of some institution to lend you money under the belief that you were capable of paying it back.
Whatever those lessons were, you have been influenced by what credit is. What is does is something else entirely. Used wisely and with respect, it can increase your ability to not only buy a home or a car. It can also impact the interest rates on those loans as well as the premiums you pay on insurance. It can even influence the hiring process. All of this of course is based on some judgement made by those who track your financial activity, and when the numbers are crunched, you are "spit out" with a score.
While those of us with good credit know many of the mistakes we have made and fixed them, a new number is about to enter the process, one that digs deep into that financial closet. Is digging up a distant error in financial judgement a good indication of who you are?
Until recently, the major credit bureaus kept track of these transactions. Equifax, TransUnion and Experion delved through your histories to uncover any risk a lender might take on you. And in the world of finance, the lesser the risk the lower the interest rate charged. Conversely, the higher the risk, the greater the interest rate. And now, that repository of financial info on you is being "cleaned-up" by another business, CoreLogic as it explores deeper into those shoeboxes of financial memorabilia in the back of your closet.
The new effort is being lauded as something that is good for those with healthy credit scores and a more complete profile for lenders. In the aftermath of the Great Recession and its lingering effects three years later (this is being penned in late 2011), the number of those with "questionable" or at least "newly questionable" credit scores may far outnumber those who are in good shape - based on the new scoring system.
While this may protect the assets of the lender, it may do little in fueling much of a recovery. But worse, consumer advocates suggest that the problems with the report are numerous and will have the largest impact on those in the lower and often middle class.
It does remain to be seen just how detailed the report can be. But like every report, it needs to be reviewed. The big three have been known for their errors and many of didn't find out about them until we were turned down for a loan. We may not have known the insurance premiums was based on those scores and we may have been paying more than we should.
Will the CoreLogic report be flawed? Without a doubt. So you need to check it as soon as possible and dispute it. Here is the link to the CoreLogic website and of course, the link to AnnualCreditReport.com. The report can be obtained in early 2012. If you would like a copy of yours sooner, you can call 877-532-8778.
