The Credit System (The Players)
The credit system consists of you, your original creditors, three main credit bureaus, FICO and collection agencies. The credit bureaus are Transunion, Experian and Equifax. Your original creditors are the companies or lending institutions that you conduct business with. The collection agencies are the companies that buy your debt when you default. FICO is the agency that takes the data that’s being reported by the credit bureaus and plugs it into their proprietary scoring model. This model generates a score based on the perspective risk you pose to the creditor you’re attempting to do business with. The lower the score the higher the risk you pose and the higher the score the lower the risk you pose hence the lower interest rates. While all three credit bureaus have their own scoring model, FICO is the most widely accepted scoring model amongst businesses and financial institutions. Fico has been used for years and there are specific models for mortgages, auto loans and credit cards. Due to the various models there may be some variation in score depending on which FICO model the lender/business is using.
The Credit System (In Action)
The credit system is built to work seamlessly in the player’s advantage. For example let’s say you walk into a department store and decide to make a large purchase. You decide to get a store card to complete the purchase. You receive the bill every month and make it a priority to pay it on time. A few months go by and it’s time for a new car. You go to the dealership and the salesman informs you that he can only get you qualified for a 15% interest rate because of the late payments reporting on your credit report. Late payments? What late payments you ask? You pay all of your bills on time. Furious, you accept the 15% and the car. You hurry home to check your credit report for yourself. The store department where you made the large purchase incorrectly reported that you’ve been late every month. Enraged you contact the department store’s credit department and they ensure you they will resolve the matter. If this mistake wasn’t on your credit report you could have gotten financed with a 1-3% interest rate. Now you’ve been forced to pay almost $100.00 more a month in interest because of their mistake! A year go’s by and you decide you would like to take advantage of the housing market and purchase a new home. You work with a realtor to find the perfect and home and she sends you to the mortgage broker to get pre-qualified. It’s been a year since the late payment mix-up and you’ve made it a priority to pay all of your accounts on time. The broker tells you that while you are pre-qualified, the best he can do is a 7.5% interest rate. Why you ask. He tells you that while you have almost perfect credit there is an account that shows a history of late payments and you also have 2 collection accounts that you’ve never even heard of. Again you’ve been victimized by the system. Each time you attempt to get financed their mistakes have cost you more money. You tell the broker that the information on your credit report is wrong. He tells you to contact the credit bureaus to address these issues. You call them and write them to no avail. You go back to your broker and he refers you to a company called Family 1st Financial that specializes in credit improvement. They review your credit report and inform you that they can have this inaccurate information removed. They work on your file for two months and send you back to your broker who then quotes you a rate of 2% for your new home loan. You’ve just saved hundreds of dollars every month and it’s all due to having an accurate credit report!
The Credit System (How Credit Improvement Can Help)
Credit improvement is one of the most underestimated financial services available to consumers. The media has portrayed credit repair as either illegal or unethical for years because of a few bad apples in the industry. The truth is that credit improvement has the power to change your life. The media has also portrayed the credit bureaus as government agencies that are nearly untouchable.Fortunately the credit bureaus are not some government entity that has absolute authority over what or how something is reported on your credit file. If there is an inaccuracy on your credit file it can be removed or corrected so that it reports correctly. Most people think that the inaccurate information reported on their credit report has to stay there for 7 years. This is completely untrue. The credit bureaus are legally required to report accurate information. Small inaccuracies have a big impact on your credit score. When lenders take a look at your credit report they automatically assume that what’s on your report is accurate. They don’t know that Foreclosure or Bankruptcy doesn’t belong on your credit file or that 4 of the 6 accounts on your credit report actually belong to a different person with the same name. A credit score today carries a lot of weight! It can literally determine your quality of life. If your credit score is low because of items that are not an accurate reflection of who you are or the manners in which you actually handle your finances then you are doing you self a huge disservice. The player’s of the credit system are governed by specific laws. Laws such as the FCRA,FCBA and FDCPA just to name a few. Family 1st Financial uses these laws to force the players (credit Bureaus) at fault to correctly report the account or have the account deleted. The Deletion of inaccurate information translates into a higher FICO score, lower interest rates and more money in your pocket. Our Credit Improvement programs come standard with services that address specific areas that may be indirectly related to your credit reports. These services include creditor intervention and statute of limitation verification to name a couple. Our main goal is to ensure that your credit report is 100% accurate and that your FICO score has been optimized to save you the most money!
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