You and Your Credit Report
Debt incurred by U.S.
Consumers has risen steadily over the past decade and now tops $3 trillion,
according to the Federal Reserve. Meanwhile, median incomes have dropped over
the same period, and more recently, the worth building engine of home price
increases has dropped precipitously. As a result, many are struggling to keep
up with their credit card debts. For these people, and for anyone who needs or
uses credit, having a clear understanding of how credit reports and credit scores
are compiled and analyzed is very important. Credit reports are used for a
variety of purposes, including, in some case, as a screening criteria for new
hires at some companies.
There are three main credit agencies, Equifax, Experian and TransUnion. If you have not reviewed your credit report recently, you should, and you are entitled to one free report from each of these agencies each year. You can order the report more frequently, typically at a cost of about $10 per report. It is a good idea to review reports from all three agencies as each collects information differently, and the various lenders do not always report to all three.
The reports detail the names
of your creditors, how long you have had the account, the type of loan and
other signers on the account. Additionally, it provides information on the
amount of the loan or credit limit, how much is owed and what the payments are.
The report also details the status of the loan and what your payment history
has been, and inquiries into your credit history and whether there have been
any public filings, such as bankruptcies or tax liens.
All reports are different, but in terms of your payment history, you will want to look at the report to understand the extent to which, if at all, your report shows payments that were not made on time.
When reviewing your report, you want to first examine it to make sure there are no mistakes. If there are, correct them on the form and return it to the agencies. Mistakes on credit histories are very common, so look at the report carefully, and take the time to correct the errors where found. And, be patient, because resolving these issues can take a little time. For starters, creditors have up to 30 days to respond to disputed charges or accounts.