Credit Reports and What They Mean To You

The information in this page is of utmost importance to your financial future, so please read it thoroughly.

Credit reports are often regarded with dread, especially by those who have entered turbulent financial waters. But reality is never your enemy, even when it is unpleasant. In order to promote financial health, and resolve any debt problems you may have, it's essential to have the best information possible about your credit status. That information is found - both by the lender and, more importantly, by you - in your credit reports.

Those reports are maintained - in the U.S. - chiefly by the three major credit reporting agencies: Equifax (PO Box 740241, Atlanta, GA 30374; www.equifax.com), Experian (PO Box 2002, Allen TX 75013, www.experian.com) and TransUnion (PO Box 2000, Chester, PA 19022; www.transunion.com).

The reports contain the history of your credit cards, home loans and other debt. They also record any late payments that occurred and how late they were, (30-day past due, 60-day past due, etc). The reports will list any current and old address, employer, your social security number, and often your telephone number.

That information is readily available to any qualified party - a bank, a mortgage lender, a credit card issuing company and certain others during legal proceedings. But, though the companies all genuinely try to maintain accurate records, the reports may contain errors.

Examples of the errors commonly found on the reports are: They may list loans as active when they have actually been paid off. They may list current credit cards you canceled long ago. And, they may fail to list payments made to make up overdue amounts. Even worse, they may list accounts that belong to somebody else. Often, this isn't sloppiness on the part of the credit bureaus but simply a reflection of timing and other common human errors in keeping records. The world may be computerized, but those databases still don't always communicate effectively between companies using different systems. And these databases are updated by people who can make mistakes.

We highly recommend you get copies from all three agencies and review them thoroughly. Make a note of any errors, establish proof of the error, then send a registered letter with the proof to the agency asking them to correct the data. The amount of credit reports that contain errors is staggering, and remember that errors in your credit report could mean higher interest rates on your home, your next car, etc. It will cost you extra money not to fix the errors!.

Thanks to recent legislation, you can obtain one free copy of your credit report per year. There are numerous ways to do that by filling out a form online or calling. One way is to go to: annualcreditreport.com.

On a more positive note, having the information at your fingertips allows you to develop a debt-free plan for your future. Understanding your past credit history is the first step in creating that plan.

Review your history and note any current overdue amounts. Clear those up first, as quickly as possible. One method is to pay off any smaller outstanding amounts first. That frees up funds to be used on the next larger outstanding amount. Working your way up, you will eventually begin to see light at the end of the tunnel. The good news is, you CAN repair your credit.

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