Getting to Know Your Credit Report
A Credit Article Contributed by Jenni Mckinney
What is a Credit Report?
A credit report is simply a report card in which you have been graded for credit-worthiness by all of the companies you have done business with in the past. For example, any time you have taken out a loan, or been issued credit in the form of a credit card, or have created a bill that you have agreed to pay over time (such as medical bills)-all of the companies on the other side of the table from you have reported your behavior to three central information agencies in the United States.
In turn, these three agencies have organized your data in such a way that it is now presentable to any companies you will apply for credit with in the future.
Types of Information Found on Your Credit Report
Your credit report begins when you are issued a Social Security card and number. That is how your information is tracked primarily. The three big information tracking agencies are Equifax, Experian, and TransUnion, and they use your social security number to gather address and job history information, as well as any kind of public record you may have such as civil suits or birth records.
In addition, the agencies track all of the companies with which you have applied for credit, whether you got it or not, and finally your entire credit history, including dates of opening and closing the accounts, balances and maximums, payment dates and overdue payments made.
Your Credit Report Remembers Your Past Behavior
If you have misbehaved in the past, this information is available today. For example, if you were issued a credit card from Discover, and after running your card to the limit, refused to pay the bill, you would be "in default", and your bill would be turned over to a collection agency. If, later on, you ended up paying that bill in full, it would still not be removed from your credit report on the basis that past events are the best predictors of future behaviors.
In other words, this bad news will follow you on your credit report from 7 to 10 years. This type of negative grading includes any late payments you may make as well.
Your Credit Report Can Be Incorrect
Many people simply assume that whatever their credit report shows must be true, and because of this assumption, they do not review their credit reports on a periodic basis. Unfortunately, these information agencies are made up of fallible people who can enter incorrect information accidentally that could negatively affect your credit for years.
It is recommended that you request a copy of your credit report from at least one of the three information agencies at least twice a year, which is how often the agencies will provide you with a free report (any more frequently and you will have to pay a nominal fee of around $8 per report). When you receive your credit report, diligently go through each and every entry to determine its accuracy.
Most times there will be an error within the address and job history sections of your report, but many times you will also find errors within your credit history. When this occurs, you must fill out the appropriate forms that the information agencies provide stating that you would like to challenge the veracity of certain items.
The agency then has 30 days to confirm the information, and if they cannot confirm it, they are obligated by law to remove it from your credit report and send you a new credit report showing this revision.
