Understanding Your Credit Report

I've been taking a biweekly personal finance class lately. And the last class touched on credit reports. I thought I would share some information with you.

Credit reports are often viewed with dread, especially when you find yourself with problems getting credit or managing your debt, but in fact they can be very helpful and useful tools not only for lenders but also for borrowers.

Most countries have a credit reporting system and in the United States credit reports are maintained by three major agencies - Equifax in Atlanta, Georgia; Experian in Allen, Texas and TransUnion in Chester, Pennsylvania.

A credit report is simply a history of the credit you have, or have had, going back over the past several years and includes details of everything from home and car loans to your credit card accounts. Entries on your credit history will show such things as when a loan was taken out, how much that loan was for and whether or not payments have been made on time and are currently up-to-date. The report will also list some personal information such as your current and previous addresses, telephone number and social security number.

The information contained in your credit report is then available to lenders such as banks, mortgage companies and credit card companies and, if you apply for further credit, a lender will use your credit history as the basis on which to make his lending decision.

One of the problems with credit reports is that, while every effort is made to ensure their accuracy, mistakes are made from time to time and it is possible that you might be refused credit because your credit report does not accurately reflect your credit history. This can be extremely annoying to say the least but there is action which you can take to correct this and, more importantly, to avoid it happening in the first place.

The law requires that, on request, you are provided with a copy of your credit report free of charge once a year and, as part of your own annual financial review, you should always ask for this free report. This gives you the opportunity to spot an error on your report and to ask for it to be corrected before it becomes a problem. Correcting an error is simply a matter of establishing proof of the error (for example a statement from a lender showing that a payment marked on your credit report as being late was in fact paid on time) and then sending this by registered mail to the credit agency with a request that they amend your record.

Another very good reason for requesting a copy of your credit report is that, if you have been having debt problems, it can give you a very good basis on which to build a plan to not only clear your debt but also to re-build your credit history. Although just how you go about this is beyond the scope of this particular article, there is a very strict timetable for recording debt on your credit report and your report will point to debts which you should clear first and to others which can be put to the bottom of your list. Click the link to learn how to repair your credit.

If you have never seen a copy of your credit report then you should request your free three bureau credit report package today. You might be surprised at just what you can learn from it and how helpful it can be in planning your future requests for credit.

07.22.2008. 21:43

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