Many people are surprised when one or more companies, institutions or individuals turn down their application for a mortgage, car loan, personal loan or even a credit card. What is more discomforting is that most of the time there is no explanation for the refusal, which happens when a credit score is really bad. In fact, most people are unaware what a credit score is or that one exists at all. The devil of the plot may be your credit score, which is so bad that no one wants to lend you money. However, in many cases a credit score goes bad due to unjustified listings in your credit history and these mistakes result in a bad credit score due to no fault of the individual. Here is how you can deal with these unjustified listings.
Check your credit history
Lenders such as banks, credit card companies, mortgage companies, car loan companies and in many instances even property dealers and landlords and utility companies report payments received and loan applications to credit bureaus. These bureaus use this information handed to them by your creditors to calculate a score, which is displayed to lenders in the country. If you make one or more payments and these are not reported to the bureaus, your credit score will be adversely affected. So, since you are entitled to a free copy of your credit history each month, you should contact all the bureaus in your area and get a copy of your credit history.
Your credit history is all your financial activity, barring your personal banking, salary and shopping activity. This history is not shown to your creditors – just the three-digit score is and by this score lenders can gauge whether or not you are a credit worthy person. A bad score will, in most cases, get your application for a loan turned down, or if not, you will be offered a much higher rate of interest that the prevailing rates.
Report discrepancies immediately
Go through the copies of your credit history with a fine toothcomb. Look for listings such as payments you have made but are not showing up in the history, or are showing up as late payments. Bring any discrepancy to the notice of the bureau and send a copy of the complaint to the creditor. Remember that the bureau will not make changes to your credit history unless your creditor tells them to. You can only take the matter up with the bureau of the creditor does not respond to your complaint. Send proof of payment to both the bureaus and the creditor. They have to respond within a fortnight, if not the bureau will have to make the changes themselves. So, work with your creditor to remove any unjustified listing on your report and let them know that you are keeping an eye on your report. This will make them be more careful when dealing with your account.
When the bureau gets all the facts they will recalculate your score and modify your credit history to reflect the changes and your score will improve immediately.