Consumer Credit Introduction
Credit scores are commonly used by all lenders and are becoming more prominent with employers, insurers, landlords, as well as cell phone and utility companies. The reality is that a credit score is black and white. It is a mathematical formula that allows lenders to make a quick decision on the consumer's ability to repay a loan, mortgage or credit card. Supporters of the system argue that it does not discriminate based on race, sex, etc. Those opposed to the system point out that credit scores fail to take into consideration, tragedies such as medical emergencies or loss of employment. Although credit scoring is considered nondiscriminatory, many are skeptical that low-income workers, minorities and other segments of the population who can not access credit cards and mortgages may score lower than others.
Another major concern is that the accuracy of credit reporting is not a priority of the major credit bureaus and is thus suspect. The good news is that the law favors the consumer, however without the correct understanding of the law it becomes difficult and time consuming for the individual to repair their own credit. The Fair Credit Reporting Act allows the consumer the legal right to dispute items on their credit reports that may be inaccurate, out of date, incomplete or unverifiable.
