De-mystify the Business of Credit

Getting a handle on the “ins and outs” of credit is core for small business owners and consumers


In an ever-evolving attempt to de-mystify the business of credit and make it easier understand the Board of Governors of the Federal Reserve System introduced notification rules. They laid out guidelines and “how to’s” for small business owners and consumers to secure greater empowerment.

Small business owners and consumers now have a broader access to their credit file information allowing them to readily check and correct any recorded inaccuracies and at the same time understand “why.

Here are five small business and consumer scenarios and how to approach each scenario.

1. When applying for credit

When applying for credit, a Credit Score Notice is expected to be received.This documentstates your credit score and information on how your score compares to others applying for the same type of loan. Lenders would provide this notice to all credit applicants no matter what type of credit is being sought/offered. A sample of the new Credit Score Notice can be found here.

No matter what type of loan applied for, mortgage, auto loan, or other types of credit, you must be provided a Notice regardless of the terms of credit offered by the lender.

Should you not have a credit score, the Notice from the lender would include the name of the Credit Reporting Agency that has no credit score on file for you.

2. Declined credit

When the lender reviews your credit score and declines you credit, you will receive an Adverse Action Notice. The contents of this document include your credit score and any related information pertaining to that score number. As a credit applicant who has been declined, you should check your score and if any inaccuracies are found, contact the credit bureau to dispute the information.

Human error in recording information or in some cases the lack of reporting, is the biggest cause of a consumer being refused credit.

Mistakes made in the following areas can lead to lenders not granting you a loan.

These include; incorrect personal information (name, address, social security number and more), tradelines and collection accounts, payment history, information recorded as public record, mixing files and identity of consumers, re-aging of debt, information still on your file past the statue of limitations, identity theft, and more.

3. Credit on less than favorable terms

If you are being offered new credit but at a higher rate and less than favorable terms than other consumers applying for the same loan, it is incumbent upon the lender to send you a Risk-Based Pricing Notice.

A notification of this type should alert you to the possibility of inaccurate and disputable information on your credit file. A thorough investigation affecting removal of inaccurate information can save consumers money and at the same time make it easier to acquire credit on more favorable terms.

Next page: What to do upon Notice and Right the Wrongs of the Credit Report

Elizabeth Karwowski
Elizabeth Karwowski
Elizabeth Karwowski founded Get Credit Healthy, Inc., a consumer advocate organization to help individuals get back on the right path to credit health. She has obtained her FICO & Fair Credit Reporting Act certification. As a recognized credit expert, Elizabeth has been featured on NBC and Fox News, published in Scotsman’s Guide, Today’s Chicago Women and other print media. Over time, she has helped countless individuals restore their credit. She is an active SCORE counselor and a board member for the City of Miami Beach Success University.   Elizabeth Karwowski was formerly the President and CEO of Trust One Mortgage Corporation. After Graduating from Northern Illinois University with honors, Elizabeth worked for Ernst & Young LLC and RSM McGladrey as part of the consulting team. Website

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