Three Basic Steps To Building a Good Credit Report
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A credit report, also known as a credit history or credit file, is not one of life's options. Credit reporting agencies are private businesses that supply your credit report to lending institutions and others with a need to know.
Like it or not, the information in that report will determine the types of mortgages, auto loans and credit cards you get, and even where you can live. It can even be the deciding factor in whether you'll land the job of your dreams or be passed over for someone with a better credit history.
There's a lot you need to know about credit reports and how they impact your life. Ignorance is NOT an option; you never know when the information will have a MAJOR impact on your life. Be pro active: learn everything you can about your report and how you can make it the best it can be.
I can't possibly cover everything you need to know here, but here are 3 basic starting points. Then, it's up to you to educate yourself further. The Internet contains an avalanche of information and your local library or bookstore can provide you with some good books. Take advantage of it.
Credit Report Basic Step #1: Check It!
Credit reports can be intimidating. You get the impression that they're mysterious and hard to read. Well, they're not and...they're not. Though each have their own format, the credit reporting agencies do their best to make the reports user-friendly.
There are three major agencies: Experian, Equifax and Transunion. You can contact them individually or get a 3-in-1 report from providers like ConsumerInfo.com and MyFico.com.
The point here is to take charge of your life. Check that credit report!
Credit Report Basic Step #2: Dispute It!
Go over each report carefully. Don't assume they'll contain the same information. They may not. One report might have inaccurate information while another might have incomplete information.
The Fair Credit Reporting Act, passed in 1971 (and amended in 1996) allows you access to your credit report and the right to dispute inaccurate, incomplete, obsolete or non-verifiable information. So dispute it! (And while you're at it, update your address, phone number and employment information.) It can only help you.
You should receive a dispute form and instructions on how to file a dispute with your reports. If you have any questions or didn't receive the information, simply call the agency or log onto their Web site. Most agencies allow you to file a dispute online, saving you a lot of time and hassle.
Credit Report Basic Step #3: Pay It!
Once you've removed inaccurate and incomplete information, your next step to polishing up your credit report is to start paying your bills on time (if you're not already). That includes not just loans, but utilities and telephone bills. Late payments on any of these can wind up on your credit report and cause a lot of damage.
If you have a history of late payments, don't despair. More weight is given your most recent payment history. As you begin to pay your bills on time, older late payments will drop off and your credit standing will improve -- substantially.
Taking steps to educate yourself and polish up that report will provide benefits for a long time to come. It's never too late to begin.
Posted by jonathan on February 03, 2005 at 06:36 PM