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Online Credit Report > Online Credit Report: Getting Accurate Data Not An Easy Task
Online Credit Report: Getting Accurate Data Not An Easy Task |
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Online
credit report agencies maintain a complete record of the history of a
consumer's financial life, which is known as a credit report. Lenders and
creditors rely heavily on this report to assess the creditworthiness of
prospective borrowers. Nowadays, you can also get this report online but some analysts doubt the accuracy, completeness, timeliness, and consistency of this online credit report and have shown concern about the effects of data limitations on the availability and cost of credit. Creditors have now started relying more on credit history scores and less on actual physical review of the credit reports. Two factors affect the data limitations on access to credit. First, a minor error in an online credit report is likely to have little or no effect on access to credit for an individual with many reported account histories, but the same error may have a significant effect on access to credit for someone with only a few reported account histories. Second, information about credit-scoring models and their factors is ordinarily proprietary and hence difficult to obtain. As such assessments of the effects of data limitations become difficult. Online credit report is the organized presentation of information on an individual's experiences with credit, leases, non-credit-related bills, collection agency actions, monetary-related public records, and inquiries about the individual's credit history. Along with credit scores, online credit report has long been considered one of the primary factors in credit evaluations and loan pricing decisions. These have often been used in identifying potential customers for property and casualty insurance and in underwriting and pricing such insurance. They are also widely used to select individuals to contact for prescreened credit solicitations. Credit-reporting agencies collect data every month from creditors, governmental entities, collection agencies, and third-party intermediaries and they update their credit records within seven days of receiving new information. Since each agency receives nearly 2 billion items of information each month, the agencies have developed a standard format called Metro format and it may be submitted through CD-ROM or electronic data transfer. Completeness and frequency of reporting can vary as reporters submit information voluntarily and there is no statue or federal law making it mandatory to report data to the agencies or to use a particular format. Using Credit Records to Evaluate Creditworthiness Credit history scores are determined after considering a wide variety of summary factors drawn from credit records and they are built by combining information from different items within an individual's credit record. There are hundreds of factors that compose the key elements of credit models, which are used to generate credit history scores. The factors that are used in credit-scoring models are the ones proven statistically to be the most valid predictors of future credit performance. Evaluators might assess them differently but they generally fall into four different areas: payment history, consumer indebtedness, length of credit history, and the acquisition of new credit. To ensure accuracy, completeness, timeliness, and consistency in your online credit report, various techniques and editing procedures are used by credit reporting agencies. The data is returned to the reporter if there is any suspicion or discovery of any error in the same. The reporter is asked to make necessary corrections and resubmit the data. If no error is found, the newly received data is processed and compiled to create or update the record of an individual's credit experiences. There are chances of error in such processing as data reporting is voluntary and the ability of the agencies to enforce certain standards is limited. Sometimes, data items reported with the same identifying information, such as the same name, may actually be associated with different individuals. Similarly, a social security number may be missing from or may be reported incorrectly in reported information on an individual. The chances of a mix up of the reported information on an individual with the wrong person's online credit report are high in such cases. |
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