Understanding Your Credit Report

People often approach their credit reports with fear.  They assume that something negative is on them and that there is not much that they can do about it. The fact is, getting copies of your credit reports and checking them for accuracy should be a part of everyone’s plan. If there is any inaccurate information on your credit report you should know because it directly affects you and your financial life. One of the first steps in getting out of debt and creating a healthy financial life is getting current information about your credit status.  Here is some basic information and frequently asked questions concerning your credit reports.

The Credit Reporting Agencies:

In the United States, there are 3 credit reporting agencies - Experian, Equifax, and TransUnion.  All 3 credit reporting agencies are separate from each other and not all creditors report your information to all three of them.  For this reason, some of your information may be on one report but not another. Most major creditors, however, report your information to all 3 bureaus.  Here are the credit bureaus contact info:

• Experian
  • P.O. Box 2002, Allen, TX 75013
  • www.Experian.com
• Equifax
  • P.O. Box 740241, Atlanta, GA 30374
  • www.Equifax.com
• TransUnion
  • P.O. Box 2000, Chester, PA 19022
  • www.Transunion.com

What Information is Included on My Credit Reports?

Your credit reports will include a multi-year history of your credit cards, home loans, student loans, car loans, and other debt.  The reports will show your credit lender names, when the account was open, your balances, your credit limits, recent payment amounts, and whether your payments have ever been late. If you have had any late payments, the reports will show just how late they were - 30-days past due, 60-days past due, etc.  The reports will also include your personal information, including the names you’ve used (maiden or birth name and married names), your current and old address, your social security number, and sometimes even a phone number. Your public records will also be listed. This  includes bankruptcies, unpaid taxes, unpaid child support, tax liens, foreclosures, civil lawsuits, and more.

How Do I Get a Copy of My Credit Reports?

By law, you have the right to request one free copy of your credit reports each and every year. You also have the right to get a copy of your credit report if you were denied credit based upon the information it contains. To request your free annual credit reports, you can go to www.AnnualCreditReport.com or call 1.877.322.8228.

What Do I Do If I Find Errors on My Reports?

Since the information on our credit reports is readily available to any qualified party (i.e. banks, mortgage lenders, credit card companies, etc.) it is important the information found there is accurate.  The companies do try to maintain accurate records on you, but they still sometimes contain errors. Sometimes loans that you paid off are listed as active or a credit card that you canceled will still show up. Sometimes they even fail to list payments that you have made to make-up for overdue payments. More often than not, these types of errors are simply a result of timing and human error.

Once you’ve received your credit reports, review them thoroughly.  Make note of any errors that you may find, establish proof of the error (for example, a canceled check showing the payment was made on time), and then dispute the error. The dispute process may vary based on the credit bureaus. Some will allow you to dispute the errors online, while others require you send a letter asking them to correct the error showing proof.  If you mail in your dispute, it’s a good idea to send a registered letter for your records.

What is the Benefit of Having Your Credit Reports?

The best thing about having your credit report is knowing. Reality is not your enemy, it’s the first step in creating a debt-free plan for yourself.  Once you have your credit report you can understand your credit history and better calculate what you owe.  This is the first step in developing a plan to better your financial future.  Make note of any overdue amounts and make every effort to clear up those matters first as quickly as possible. Then, if you have multiple credit cards, make a list of all your balances and interest rates. Begin paying off the credit card with the highest interest rate first and then work your way down the list.  All interest rates being equal, pay off the smaller balance first. In general, it’s good practice to always try to pay more than the minimum payment.  With time and patience, you will begin to see progress being made and feel better about the future ahead.

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