Credit Reports, Scores, and Counseling Services

Info for Clients · Read in 8 minutes 

Here are some quick points to get you caught up in the world of credit reporting and scoring:

  • There are three national credit bureaus: TransUnion (HQ in Chicago, IL), Equifax (HQ in Atlanta, GA), and Experian (US HQ in Costa Mesa, CA; Global HQ in Dublin, Ireland).
  • Fair Isaac Corporation (FICO) (HQ in Minneapolis, MN) was founded in 1956, and is currently allied with Equifax and TransUnion. FICO is the brains/formula behind turning your credit report into a credit score.
  • A “credit report”is the detailed report of all your financial accounts, past addresses, prior legal names, etc. It lists your lenders, your bank accounts, loans you have co-signed for, outstanding medical bills, property foreclosures, etc.
    • You can obtain one FREE copy of your credit report per agency per calendar year–3 per calendar year–from AnnualCreditReport.com.
  • A “credit score”is the number that a credit scoring agency (e.g. FICO) produces to reflect your overall credit risk, in terms of obtaining new credit. Thus, someone with a score of 700 is considered to be less of a risk than someone with a score of 500.
  • Lenders, employers, cell phone providers, utility companies, and anyone and everyone else who wants to pull your credit (to whom you’ve given permission to pull your credit) will use your credit report and/or your credit score to evaluate their risk in doing business with you.Sometimes, businesses have a cutoff strictly based on credit score. For example, no one below a 550 score can get this cell phone service. Others, like utility companies, will use the credit score to determine if/how much of a deposit you need to make and if the deposit will be refundable.
    • Sometimes a credit score is from a single provider. For example, let’s say the entity pulling the credit is in California; they may choose to only look at Experian’s score.
    • Other times, a lender will view all 3 credit scores and average them (mean) or pick the score in the middle (median). As an example, let’s say the credit scores are 600, 610, and 650. A lender may average them: (600 + 610 + 650) / 3 = 620 (mean). Alternatively, picking the median/middle value would result in the lender evaluating their risk on a score of 610 (median).
    • NOTE: Lenders will use your credit score as a factor in their lending decision; however, they will include other factors like income, fixed expenses (some viewable on your credit report), and longevity of employment in their full evaluation.
  • “Credit counseling” deals with improving your credit report’s attractiveness–in other words, increasing your score. The easiest way to increase your score is to prevent it from dropping by keeping current and not applying for credit all the time. The easiest way to increase your score once it’s gone down is to review your credit report
  • “Debt Management” deals with consolidating your various debts into a single payment. This usually involves asking creditors to decrease the amount of debt owed and/or lowering the recurring interest charges and fees for being overdue. In some ways, this can be viewed like an unofficial bankruptcy–your overall credit report won’t show BANKRUPTCY but your individual accounts will indicate the debt management plan.

Credit counseling and repair services aim to increase your credit score by improving the items on your credit report, thereby decreasing your perceived risk by a third-party. One way to solve a problem is to fix it (e.g. get current on your payment) and then just wait for 12 or more months for the late payment record to “fall off” of your account. Guaranteed: once you fix a problem, time will help repair it if you don’t get in trouble again. However, there are a multitude of strategies and methods to improve your credit score because there are many combinations of data within each person’s credit report.

A major pain (to say the least) is dealing with identity theft. Just doing a Google Search for identity theft comes up with mostly .gov and .org links on the first page. The federal government recognizes it as a huge problem–an epidemic:

The results of identity theft go further than impacting your credit report; however, you need to correct false information on your report. I’ve seen students applying for financial aid loans for college who get denied credit and come to find out that their own parents or family members stole their identity to obtain credit. I’ve seen overdue medical bills on credit reports for people who have never been in a hospital. Whether you have a credit/ID monitoring service or not, you need to get a copy of your credit report periodically and search for inaccuracies. You know your financial history better than your monitoring agency. It’s not hard, but it could take some time. Again, you can get your free credit report–once per calendar year per credit bureau–from AnnualCreditReport.com.

Before reading further, I’ll share this reminder: Credit should be used wisely. Wise use of credit over time increases your score over time. If you’ve had credit challenges, increasing your score to you can obtain new credit so you can get into financial trouble again is not wise. Know thyself. And I’ll follow it up with this article from Crown Financial Ministries: “Credit Repair Schemes”. Hopefully, now, you’ve got a good dose of reality and ownership of your financial situation–whether great, good, or not so good. You need to know that no one else can be you and, ultimately, only you can decide your financial choices. Keep reading…

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You can search the Better Business Bureau’s (BBB) list of accredited businesses for Credit & Debt Counseling providers in the Tulsa area. The BBB also provides great advice in these articles:

Additionally, there are some associations that could help you in your search for a credit counseling provider and information:

There are some specific companies that I have come across; some charge, some do not:

Ultimately, it’s up to you to do what you can do to save time and money (e.g. obtaining your own copy of your credit report from each agency and reviewing it). Then, evaluate what services you need (e.g. credit counseling, disputing inaccurate credit report data, debt management/consolidation, etc.). Then search for a reputable provider of the service(s) you’re needing, and obtain up-front cost information. Again, check out the scams mentioned in the Crown Financial article above before proceeding.

Disclaimer: I have not personally used any services of a debt counselor and cannot be held responsible for any negative consequences of finding an agency or counselor from this site. You need to make your own financial decisions. Provided for informational purposes only.

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