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How accurate are credit reports?

1 in 4 credit reports conain a serious error that can deny credit to consumers applying for a mortgage or car loan, and credit cards as well as employment.  79% of credit reports contain some sort of error according to 2004 US PIRG(Public Interest Reporting Group). Furthermore, 48% of all employers pull a full credit report. 

I pulled my credit from an online source, does that hurt my score and are the scores accurate?  

Those pulls don't hurt your credit; however the scores are different from what your lender will pull.  Even if you pull a FICO score from the FICO website, depending on what is on your credit report and which version you pull your scores could vary greatly. 

What is FICO?

FICO stands for Fair Issac Company.  They are the company that calculates your score.  The FICO score is used by 90% of banks and lenders. FICO takes the information provided by the bureaus and using a proprietary formula calculates your score. Your score is seen as your likelihood of paying back credit extended to you. 

What is used to calculate the score?

35% is past delinquencies and pay history, 30% is debt and utilization ratio, 15% is the average age of payment history, 15% is your mix of credit and 5% is inquiries. 

I paid my collection.  Why is it still reporting on my credit report?

The collection companies can report an account that has a zero balance for up to 7 years.  They don't have to report report it at all and that is an important point to understand and another factor to get in writing with them when you are negotiating a payment. 

I've thought about working with a credit consolidation or debt settlement company, is this a good idea?

Yes and no.  Working with one of those entities will eventually get your debts paid off, but you need to make very sure you understand the fees that are charged to you up front and what their methods are to negotiate a payoff.  If it includes not paying your bills and taking multiple late payments that destroy your credit,then maybe look at another company or negotiating on your own behalf. I can't emphasize enough to know exactly what you are agreeing to up front.

I don't need good credit.  I have what I need. Why should I worry about it right now?

Credit isn't just for buying new things it also can affect employment.  48% of employers look at your credit to se how stable you are financialy. Insurance rates, not just home, auto, and life, but health insurance as well. And who needs higher health insurance rates.