PsychDoc's Credit Insider Guide to...
CREDIT BUREAUS AND CREDIT REPORTS
Psychosis #3: Including A Credit Statement Is Helpful.
What sheep they believe us to be. In the early 1970s when the Fair Credit Reporting Act first gave Americans the right to include such statements on their reports, life was different. Prospective creditors still actually perused consumer files with authentic human eyeballs. (Read Psychosis #2.)
So in those halcyon days of yore, a plaintive comment placed in the report by the consumer herself might have made a difference at mortgage time.
No more
Nowadays the 100-word statements can only harm the consumer. First, as we've discussed, such personal statements are essentially never read by potential creditors anyway since the credit score is the usual qualifying determinant. Second, those statements only make it more difficult to embark upon a credit repair effort later because they serve to confirm what's already there. So, for example, let's say a consumer attaches a statement that reads something like this:
"These late payments were made only because I was suddenly laid off (or sick), but that unfortunate situation changed very quickly, and we have never been late with this or any other account since."
That may sound responsible, but unfortunately it says only this in reality: "NOTE: yes I really was late paying these accounts. Plus I'm not smart enough to have an emergency fund to cover basic minimum payments if something goes wrong financially. Therefore, I am a bad credit risk."
Even worse, let's say a consumer subsequently learns something about credit reporting and decides to engage Lexington Law Firm to help confront things legally and technically. Whoops. The credit bureau is going to dismiss any new challenge even faster than it would have before because there's no need to even take another look: After all, it's right there in the consumer's statement which admits fault. Remember that extenuating health or employment circumstances are viewed as little more than lame excuses to these cold corporate entities anyway.
Most consumer advocate old-timers will advise that the first items to be disputed are those silly 100 word statements if any were ever inserted. The Credit Insider heartily concurs with that philosophy.
Next: Psychosis #4: Negative Items Must Remain For 7 Years
Randy Padawer (PsychDoc) is a clinical psychologist whose research interests range from personality testing to consumer credit. He has been featured in publications as diverse as the Journal of Personality Assessment, the Journal of Consulting and Clinical Psychology, and Smart Money Magazine. Dr. Padawer co-wrote the best-selling "FICO 850" seminar for The Motley Fool, and he has consulted for Lexington Law Firm and others regarding consumer behavior and credit reporting.
(This article was reprinted with permission from Lexington Law)
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Related articles:
- Part 1 - The Nature Of Credit Bureaus
- Part 2 - Your Credit Report Is Reviewed Carefully
- Part 3 - Including A Credit Statement Is Helpful
- Part 4 - Negative Items Must Remain For 7 Years
- Part 5 - Seeking Help In Repairing Credit Is Unlawful
- Interesting Sidenote -
The Wild Wild West!
- CREDIT SCORING:
- Part #1: Good Intentions
- Part #2: What Happened?
- Part #3: Shoddy Math
- Part #4: Secret Decoder Ring Needed
- Part #5: Improve Your
Score
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