by Sheba Hayward

Created on: October 28, 2008

Although the credit rating system does give a picture of payment history and how an individual uses credit there are several areas where it is completely unfair.

1. If you pay a card or account on time for 7 years but are 30 days late 1 month out of those seven, your score is immediately reduced just as if you were 90 or 120 days late. There is a significant difference between a person who pays consistently despite an occasional 30 day lapse and a person who only pays when threatened with collection or default. The system does not recognize this.

2. Your score is lowered rather than raised when you have a lot of zero balances on accounts. Does this make common sense? This should raise your score showing that you are paying off debt and not incurring more. No wonder we're in a "credit crisis"!

3. For something to positively impact your score takes 6 months (i.e. regular payments, paying off a loan fully) but one negative thing regardless of how small takes one month to impact your score and at least 7 years to come off. Criminals get better treatment and consideration.

4. Incorrect information on your report takes an act of God to remove despite it being someone else's error. For example, my ex-husband had a tax lien on his report, this got onto my report when we got married and it took 2 years of letters and repeated requests to investigate this before it was removed in 2008. I was divorced in 2005.

5. If it appears by your credit report that you are having financial difficulties or your rating is negatively affected interest rates are immediately raised. If money is tight what makes banks, retailers and financial institutions think that raising your interest and making you pay more money is going to help the situation? What kind of a solution is that?

It is no wonder that people choose bankruptcy, default, or go to credit counselors or attorneys to get their debt reduced (which, incidentally many of them pay for). I know well the need to communicate with creditors and make on time payments. It definitely helps and I have raised my score significantly in the past 3 years with much hard work. With the way our credit rating system works however, at times it is tempting to just give up trying to be debt free and be stupid with credit. I know in my heart I will not do that but I do hope that with the financial crisis of the U.S. that those of us who are trying will excuse the pun get some credit for being a good citizen and working to reduce our debt.

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