The common methodology that is applied by credit bureaus for working out credit scores in USA is based on the following broad factors; 35% on punctuality in making payments, 30% the debt ratio, 15% length of credit history, 10% types of credit, 10% on credit search. The punctuality factor takes into account the payments that have been made that have gone over 30 days. That means that if one defaults on payments for over 30 days the score is reduced. The debt ratio means that the amount of credit one uses against the ceiling that they have with the credit companies. For example if one has a credit ceiling of $ 5000 but on average uses only $ 2000 the credit rating will be high. Two other factors which are, length of credit history and credit searches are self explanatory and do not require to be explained. Types of credit are a very broad term that is used by credit companies and the categorization used by the credit bureaus may differ.

The accuracy of a credit report is based on a number of factors, like what is the debt ration that a person uses, how many credit lines does one have. How punctual are the repayments and how up to date and accurate is the credit report. There are four major factors that are taken into account by the credit reporting bureaus which are; credit reports from creditors, information from collection agencies, purchased information regarding bankruptcy and other financial related issues and fourthly inquiries made by creditors. There are several reasons that a credit report may be inaccurate for example if the credit agency does not forward records of payments on time or there is a mistake in one’s social security number and the date on which a credit report is compiled can also effect its accuracy. For example getting a credit report before a credit company reports a payment and after the credit company has reported the payment will cause a difference in the credit score. People with a longer credit history may have a better credit score then one with a shorter credit history as the longer the history the greater will be the average applied.

One should compare all three credit scores and in which there is a discrepancy it should be reported and removed. The reason for discrepancies in the credit bureaus reports could be because the credit company has not sent them an update regarding payments. Also the three bureaus may have taken out the credit scores on different dates. All three credit bureaus in USA are required by law to have a toll free number on which a person can call and report a discrepancy. Off shore companies are not required to submit credit histories to the credit bureaus in USA and so their records would be missing.

The USA government implemented the Fair and Accurate Credit Transactions act with amendments in 2003 which is also referred to as the FACT act which requires the credit bureaus to provide fair and accurate credit reporting based on certain factors and to prevent the misuse or theft of credit information. A credit report accuracy is based on the correctness and timeliness in which data is provided to the credit reporting bureaus and a discrepancy may occur not due to any fault of the credit bureau but because the credit companies fail to provide the credit records on time to the credit bureaus.

Credit reporting accuracy is based upon the credit unions, banks, mortgage companies, utility companies and other consumer credit agencies providing the data on time to the credit bureaus. The other factor is the accuracy of reporting credit activities.

The accuracy of a credit report plays a major factor in getting a loan or in some cases even a job and banks, mortgage companies rely heavily on the credit reports that one provides before they are willing to extend a loan. Some people are not even aware of the fact that their credit scores may be wrong unless it is pointed out to them. If there is a mistake as mistakes are bound to happen since it is millions of people’s records that has to be entered in the credit bureaus systems it should be reported immediately and a corrected credit report be provided.