If you just noticed your credit score jump unexpectedly by as much as 30 points, you might be wondering who's riding that unicorn that gave your financial health an unexpected boost.
The answer isn't a unicorn, but a watchdog: the Consumer Financial Protection Bureau (CFPB). Last year, the agency submitted a report that detailed the number of ways that millions of Americans are hurt by problems and inaccuracies on their credit reports, which drag down those crucial three-digit scores. The result was sweeping reforms that included "improved standards for utilizing new and existing public records," which began to be implemented in July 2017.
The last part of the policy shift, which takes tax liens off of credit reports, just recently went into effect. If you've ever had a tax lien, that was likely the reason you saw a bump in your credit score.
Getting to know the CFPB
Did you even realize in the first place that there is a powerful government agency dedicated to making sure you're fairly treated by credit bureaus and other financial institutions?
The CFPB recognizes that, "your credit reports and scores have a major impact on your financial opportunities." (But of course you already knew that…)
Not only does the agency advocate for consumers with credit bureaus, but it also provides resources to help you better understand your credit reports and scores, correct inaccuracies, and improve your credit record overall. You can check out their dedicated page on credit reports and scores here.
While knowing that the CFPB supports you in achieving a positive credit score is reassuring, the fact remains — you are your own best advocate.
Take a page out of the CFPB playbook
The issues that the CFPB calls out in their reports and on their website give you a good indication of what areas you should be paying closest attention to as you work on improving your credit score.
The following are key areas to focus on:
1) Know your rights
You are entitled to get a free copy of your credit report from each of the top three credit bureaus (Equifax, Experian and TransUnion) once a year from AnnualCreditReport.com. Requesting your report has no impact at all on your scores, and more importantly, monitoring your credit helps you stop identity theft, find errors and inaccuracies, and understand what loans and interest rates you qualify for.
2) Understand your credit
Getting a handle on your credit history and score isn't always easy. But the good news is you have plenty of sources you can turn to that will help you understand how to deal with any situation you're facing. Yes, it can be tough to sort through the industry jargon, but you don't have to — there are plenty of resources that break things down into everyday language for you. Whether you're unsure how to start building credit in the first place, ready to rent your first apartment, or even worried you may be the victim of identity theft, you have options to empower you in facing any credit situation that may arise.
3) Take action
According to the CFPB, incorrect information on a credit report is the #1 issue reported by consumers filing a complaint. Just as the agency has called out Equifax, Experian and TransUnion for "insufficient quality control systems" and worse, for not conducting "reasonable investigations" when errors are reported by consumers, it's on you to take action. You always have the option to dispute an erroneous or invalid charge on your credit report. In most cases, you don't need to hire a company to help you with credit repair — but if you do, make sure they are legit, because often the services they sell at premium rates are simple tasks you can do for yourself. If you're in need of a boost, you too have the power to give your credit scores some love.
While experiencing an unexpected credit score jump is always a thrill, the reality is you have the power to take control of your financial future by being your own best watchdog. Take steps today so the next credit score increase you experience will come as no surprise.
