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Unlocking the Mysteries Of Your Credit Score

In an interview, Hendricks said he wanted his book to inspire more consumers to "educate themselves about this big, complex system and the money and power involved."

This book clearly has a bias, and that's fine with me. For years, Hendricks, as editor, publisher and founder of the newsletter Privacy Times, has been testifying before Congress, trying to protect the credit rights of consumers.

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As Hendricks points out, when the credit-reporting system breaks down, the impact on people and their families can range from inconvenience to financial devastation.

The latter is no exaggeration. Hendricks recounts how one consumer spent two years trying to convince credit bureaus and creditors that he was alive and was not his deceased mother. He writes about a young consumer whose new credit file was mixed up with an older man's with the same name. Nobody seemed to care that it was impossible for this young man to have had delinquent credit accounts when he was just 14.

Folks, these are not isolated cases. An increasing number of consumers have had to file lawsuits to get their credit files corrected.

In fact, one in four credit reports contains errors serious enough to cause consumers to be denied credit, an apartment lease or a home loan, according to a new survey released recently by U.S. PIRG, the national lobbying office for state Public Interest Research Groups.

U.S. PIRG collected 200 surveys from adults in 30 states who reviewed their credit reports for accuracy. Here's what the survey found:

• Seventy-nine percent of the credit reports had a mistake.

• Fifty-four percent had information that was either outdated or belonged to a stranger.

• Thirty percent of the credit reports contained credit accounts that had been closed by the consumer but were still being reported as open.

In "Credit Scores & Credit Reports," you get information based on advice from top consumer attorneys on how to dispute errors, and you learn what happens when credit bureaus investigate consumer claims of inaccuracies (actual court testimony from officials in the credit industry will make you shudder).

Key to the book is the front section, which explains how credit scoring works. For example, did you know the credit-scoring models place a great deal of weight on how recently you had a credit problem? So a 30-day late payment from last month could reduce your score more than a delinquency from years ago.

And the amount of money past due is not always as significant as how recently you were delinquent. "In other words, a $40 balance on an account that is currently 60 days late in some cases can do more damage to your credit score than a $3,000 collection account that appeared on your credit report four years ago," Hendricks writes.

"Credit Scores & Credit Reports" isn't light reading, but it sure will enlighten you. This book is available at www.barnesandnoble.com, www.amazon.com and www.creditscoresandcreditreports.com.

If you want to join the Color of Money Book Club, subscribe to my new electronic newsletter at www.washingtonpost.com/ac2/wp-dyn/admin/email. Scroll down the page and click on the box for "Personal Finance." As a benefit, each month randomly selected subscribers will get a free copy of the month's book club selection. Also join me at 1 p.m. July 21 at www.washingtonpost.com for an online discussion with Hendricks.

Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online at www.npr.org. Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or send e-mail to singletarym@washpost.com. Comments and questions are welcome, but please note that they may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.

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