Consumer credit scoring is a system used by creditors to determine if you are credit worthy, and how much it will cost you for that line of credit. The score is based on your bill-paying history, outstanding debt (how many credit cards you already have, other credit payments you have), late payments, and collection actions against you. Creditors then use this information to compare your information against the credit performance of other consumers. Based on your score, the company you want to buy from has some idea as how likely you will repay a loan and make the payments on time. Although many factors beyond your control go into this credit score, consumers who are good credit risks will have the higher credit scores. Infallible? NO. A young hardworking person who rents with all utilities included and has always paid cash for all consumer goods is a very poor risk according to the formula. That person will have to build a good consumer Credit Score.

Even if you know you don't have a credit history, ask for your score. You are entitled to one free report a year. Get It. See what history they do have on you. Using this as your base, start building a good credit history. The next time you need a big ticket item, buy it on credit. See if the store offers 3-6 month same as cash payment plan. Use it and make monthly payments. You now have credit history. Get a credit card. Leave the money in the bank and use the card for food and gas. Pay the credit card off each month. More credit history. Someday you will need a good credit history, and when you do, you will have it and you won't have to pay 23% interest because you don't have a credit history and therefore were are a bad risk.

If you have been turned down for credit, get your credit report. You (the consumer), the reporting company and the company that gave the information are all responsible for correcting inaccurate or incomplete information in your report. Guess which one that is the only one who cares. If you find false information in you credit report, write to the consumer reporting company stating exactly what you think is wrong and why. Include copies of documents that show the correct information. Give your full name and address. This is especially important if there is an item on the report that you don't recognize. There are a lot of John Smiths out there and information does get put on the wrong person's report. It happened to me. Send your letter by certified mail, return receipt requested.

The Consumer reporting company will ask the company to review the information that you dispute. If the information is inaccurate, the company must notify all three nationwide consumer reporting companies and they must correct the information in your file. Either way, the consumer reporting company must write you about the result and give you a free copy of your report if you were correct. Request that the consumer reporting company send notices of correction to anyone who received your report in the past six months. If the consumer reporting company doesn't change the disputed item, you can ask that a statement of the dispute be included in your file and in future reports. disputing incorrect information is worth it. It will save you money in the form of lower interest rates and just may mean the difference between getting the consumer good that you wanted and being turned down for credit.