Understanding what and who the credit bureaus are can seriously help you understand your credit and how it works which is something everyone needs to know. Basically, each credit bureau is a ‘holding tank’ of information about how you handle some of your finances. It does not contain everything about your finances. For example, it does not contain your checking account information or your electric bills or rent payments. The credit bureaus collect information sent to them by financial institutions that choose to report this information to the credit bureaus. Car loans, mortgages, credit cards, and student loans are some of the things reported to the credit bureaus. Collections and public records are also reported to the credit bureaus. The problem is that not all the information is reported correctly and that damages your credit profile and your ability to get financing you need.

When the credit bureaus compile this information they put it into an algorithm (a computer program) that gives you a type of a financial ‘grade’. Your credit report is like a report card of sorts that tells lenders and employers and other financial institutions what they can expect if they do business with you. If you have never missed a payment, have never had a collection, and keep your balances low or paid off on your credit cards your credit ‘grade’ will be excellent. If you don’t do all these things, then your credit score will reflect what the computer program thinks about how you handle your money. Obviously, the program was created by people and it is going to reflect what people would or might think about your credit if they were looking at it without the credit score. Of course the program has no way to take into account your life and everything that you have been through. The credit score simply gives the creditors a way to look at your credit report quickly. If they see a 524 credit score, they pretty much know that they don’t want to deal with you. If they see a 724 credit score, they know right away that you are the kind of customer they want. If they see a 624, then they know that the need to look closely at your credit report before they make a decision. I am painting with broad brush strokes here but I think you get the picture.

The dilemma that a lot of people face is credit bureaus and/or creditors not reporting information accurately. This is a rampant problem with the credit bureaus and with the creditors alike. For the most part, the credit bureaus just pass along the information they get from the creditors, however they are not allowed to report untrue or inaccurate data. If you are suffering from inaccurate information on your credit report there really is no good solution other than self credit repair. If you have solid proof of the errors on your report or if the errors are very obvious, sending credit dispute letters on your own will most likely be sufficient. Of course, there is a specific way to do this. You will need some guidance on how to do this and you should seek it out for free online as there are plenty of excellent resources for this. You can always Google ‘self credit repair’ as these sites will be more geared toward helping you do this on your own. There are many e-books you can buy that will also walk you through the process if you don’t want to search for free information.

It really is not as simple as just writing a letter to the credit bureaus. You need to send proof that it is indeed you sending the letter. This would be a copy of your driver’s license, a copy of your social security card (if this makes you nervous, don’t worry, they already have your social security number) and a copy of something else like a utility bill that confirms to them again that you are who you say you are. Also, it is not always wise to make your dispute ‘specific’ because if you make it specific, they will only research what you specify. If you make your dispute broad then they have to dispute the whole account. This might take the creditor a while to do and then time is on your side because if they don’t respond within the allotted time, the account will be deleted which will work in your favor.

You are going to need to get a copy of your credit report. Often you can get this from the lender that turned you down or you can go online and get it for free from many different resources. Be careful though as some sites that look like they will give it to you for free are really trying to sell you something else. If you agree to their offer, you can usually cancel within a week and be charged nothing.

Author's Bio: 

Matthew S. Wierzbinski is one of the owners of CreditBlossom.com which is a self help credit repair web site that offers a free credit repair guide and free credit repair software. The guide walks you through self credit repair step by step and is based on Mr. Wierzbinski's years of experience helping people who could not qualify for a mortgage to repair their credit on their own and get approved to buy a house. The software is the same program he used also to help people make their credit repair dispute letters.