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Readers react: Credit reporting system stinks!

Your credit rating can make you or break you and chances are you either love the way the system works or you hate it.

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We asked readers to share their experiences and views on the existing credit system.

Here are excerpts from the responses we received on the "hate it" side:

I have had a perfect credit report with a lot of activity from years of school loans, car loans, house loans and credit cards. One day I checked my credit report and a late payment showed up from my mortgage company. It came from my home equity loan which had been refinanced. During the refinance there was a 25-cent interest charge left from the previous loan to the next. I had called in to the mortgage company at the time my statement came in and asked if I could wait a month to pay this since things were changing and it would cost more in postage to pay it. I remember having a bit of trouble with this person (bad day at the office I guess) and it was reported as a 30-day late payment. I called again ... they said they would clear it up for me.

When I checked into getting a loan for a new car I was told one late payment on my credit report bumped the loan up by 0.5 percent. I was shocked that a 25-cent unpaid bill could change a loan by hundreds of dollars. Lesson learned, even a small nick on your credit report by the smallest of things can add up to large amounts of money over time. -- K.H

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As a homeowner, educator and counselor I had one client whose credit score dropped despite the fact that there was not one letter changed in the entire report, including inquiries (this from a preclosing update report which should definitely not drop a score like this). Confidence in credit scores? Why should we have any confidence when no one will release the exact calculations involved? How can we know they really are legitimate? It's just another good idea gone bad and can't be trusted until FICO fesses up. -- P.H.

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I wonder about how you attribute fault when it comes to bad credit. Is it really my fault I got $8,000 worth of debt from a wife that ran off with a friend after I was severely injured and permanently disabled in a car wreck while stopped at red light? A drunk didn't stop at all -- not exactly my fault. Before the injury I owned a business and earned $250,000. I was pretty careful about debt -- though my ex ran up the $8,000 in the two months before she left. One can ruin one's credit rating through disability, illness, divorce or business failure. That's after years of careful planning and sound financial practices and savings. I just happened to encounter all of them at the same time.

Sure I would have been better off working for a corporation and not starting my own business and creating lots of jobs. But I had heard something about the American Dream and went for it. Oh yeah, I did have disability insurance. And they had some kind of loophole that I was too tired, depressed and broke to fight about. They never paid a dime -- and it was a perfectly reputable company. Now I have a lousy credit rating because I totally refuse to use credit at all. Can't win, can I? -- J.R.

 
 
Next: Reporting a lost credit card is just the beginning.
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'05 Debt Credit Guide
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